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JOINT LEGISLATIVE OVERSIGHT COMMITTEE
ON
MENTAL HEALTH, DEVELOPMENTAL DISABILITIES,
AND SUBSTANCE ABUSE SERVICES
REPORT TO THE 2006 REGULAR SESSION
OF THE
2005 GENERAL ASSEMBLY
A LIMITED NUMBER OF COPIES OF THIS REPORT IS AVAILABLE
FOR DISTRIBUTION THROUGH THE LEGISLATIVE LIBRARY
ROOMS 2126, 2226
STATE LEGISLATIVE BUILDING
RALEIGH, NORTH CAROLINA 27611
TELEPHONE: ( 919) 733- 7778
OR
ROOM 500
LEGISLATIVE OFFICE BUILDING
RALEIGH, NORTH CAROLINA 27603- 5925
TELEPHONE: ( 919) 733- 9390
THE REPORT IS ALSO AVAILABLE ON- LINE:
http:// www. ncleg. net/ LegLibrary/
TABLE OF CONTENTS
Letter of Transmittal ....................................................................................................................... i
Joint Legislative Oversight Committee on Mental Health
Developmental Disabilities and Substance Abuse Services Membership.............................. ii
Preface........................................................................................................................ ...................... 1
Committee Proceedings ................................................................................................................. 2
Committee Findings and Legislative Proposals......................................................................... 12
1. AN ACT TO INCREASE STATE FUNDING AND FLEXIBILITY FOR MENTAL
HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
SERVICES 26
2. AN ACT TO APPROPRIATE FUNDS TO INCREASE INDEPENDENT
AND SUPPORTIVE LIVING APARTMENTS FOR PERSONS WITH
MENTAL ILLNESS, DEVELOPMENTAL DISABILITIES, AND
SUBSTANCE ABUSE ADDICTIONS, TO REVISE THE PSYCHIATRIC
HOSPITAL FINANCING ACT, TO CREATE INCENTIVES FOR
PSYCHIATRISTS TO WORK IN UNDERSERVED COMMUNITIES,
AND TO APPROPRIATE FUNDS TO THE MENTAL HEALTH TRUST
FUND. 30
3. AN ACT TO APPROPRIATE FUNDS FOR START- UP CRISIS
SERVICES, TO HIRE A CONSULTANT TO ASSIST AREA
AUTHORITIES AND COUNTY PROGRAMS DEVELOP AND
IMPLEMENT A PLAN TO CREATE A CONTINUUM OF CRISIS
SERVICES, TO PAY FOR CRISIS SERVICES FOR NON- MEDICAID
ELIGIBLE INDIGENT INDIVIDUALS, TO ENSURE ACCESS TO CORE
PSYCHIATRIC SERVICES, AND TO EXTEND THE SUNSET FOR THE
FIRST COMMITMENT PILOT PROGRAM. 38
4. AN ACT TO STRENGTHEN STATE LEADERSHIP FOR SYSTEM
REFORM OF MENTAL HEALTH, DEVELOPMENTAL DISABILITIES,
AND SUBSTANCE ABUSE SERVICES AND TO APPROPRIATE
FUNDS. 45
5. AN ACT TO CLARIFY AND STRENGTHEN THE ROLE OF LOCAL
MANAGEMENT ENTITIES. 52
6. AN ACT TO CODIFY PORTIONS OF THE STATE PLAN FOR MENTAL
HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE
ABUSE SERVICES TO CREATE CONSUMER AND FAMILY
ADVISORY COMMITTEES, AND TO APPROPRIATE FUNDS TO
IMPLEMENT THE MH/ DD/ SA CONSUMER ADVOCACY PROGRAM. 68
7. AN ACT TO ASSIST PRIVATE PROVIDERS DELIVERY MENTAL
HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE
ABUSE SERVICES. 74
8. AN ACT TO STRENGTHEN THE OVERSIGHT ROLE OF THE JOINT
LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
SERVICES; TO REPEAL THE LEGISLATIVE STUDY COMMISSION
ON MENTAL HEALTH, DEVELOPMENTAL DISABILITIES AND
SUBSTANCE ABUSE SERVICES; TO DIRECT THE OVERSIGHT
COMMITTEE TO STUDY CERTAIN ISSUES; AND TO MAKE A
RECOMMENDATION REGARDING INCREASING HEALTH CARE
COVERAGE TO INCLUDE MENTAL HEALTH AND SUBSTANCE
ABUSE SERVICES. 79
Appendices
A. Authorizing Legislation, Article 12L of Chapter 120 of the General Statutes.................. 83
B. Spreadsheet with spending recommendations. ................................................................... 86
C. Revised State Service Dollars Per Capita Allocations.......................................................... 88
JOINT LEGISLATIVE COMMITTEE ON MENTAL HEALTH, DEVELOPMENTAL DISABILITIES,
AND SUBSTANCE ABUSE SERVICES
State Legislative Building
Raleigh, North Carolina 27603
Senator Martin Nesbitt, Co- Chair Representative Verla Insko Co- Chair
May 10, 2006
TO THE MEMBERS OF THE 2005 GENERAL ASSEMBLY ( 2006 Regular Session):
The Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities
and Substance Abuse Services submits to you for your consideration its report pursuant
to G. S. 120- 231.
Respectfully Submitted,
_______________________________
Rep. Verla Insko, Co- Chair
_______________________________
Sen. Martin Nesbitt, Co- Chair
i
ii
JOINT LEGISLATIVE OVERSIGHT COMMITTEE
ON MENTAL HEALTH, DEVELOPMENTAL DISABILITIES
AND SUBSTANCE ABUSE SERVICES
MEMBERSHIP LIST
2005- 2006
Senator Martin Nesbitt – Co- Chair
300- B Legislative Office Building
Raleigh, NC 27603
O: 715- 3001 Email: Martinn@ ncleg. net
Representative Verla Insko – Co- Chair
2121 Legislative Building
Raleigh, NC 27601
O: 733- 7208 Email: verlai@ ncleg. net
Senator Austin Allran
516 Legislative Office Building
Raleigh, NC 27603
O: 733- 5876 Email: Austina@ ncleg. net
Representative Martha Alexander
2208 Legislative Building
Raleigh, NC 27601
O: 733- 5807 Email: Marthaa@ ncleg. net
Senator Janet Cowell
1028 Legislative Building
Raleigh, NC 27601
O: 715- 6400 Email: Janetc@ ncleg. net
Representative Jeffrey Barnhart
608 Legislative Office Building
Raleigh, NC 27601
O: 715- 2009 Email: Jeffreyba@ ncmail. net
Senator Charlie Dannelly
2010 Legislative Building
Raleigh, NC 27601
O: 733- 5955 Email: Charlied@ ncleg. net
Representative Beverly Earle
634 Legislative Office Building
Raleigh, NC 27603
O: 715- 2530 Email: Beverlye@ ncleg. net
Senator James Forrester
1129 Legislative Building
Raleigh, NC 27601
O: 715- 3050 Email: Jamesf@ ncleg. net
Representative Bob England
2219 Legislative Building
Raleigh, NC 27601
O: 733- 5749 Email: Bobe@ ncmail. net
Senator Jeanne Lucas
300- G Legislative Office Building
Raleigh, NC 27603
O: 733- 4599 Email: Jeannel@ ncleg. net
Rep. Jean Farmer- Butterfield - Adv. Member
611 Legislative Office Building
Raleigh, NC 27603
O: 733- 5898 Email: Jeanf@ ncleg. net
Senator Vernon Malone
2113 Legislative Building
Raleigh, NC 27601
O: 733- 5880 Email: Vernonm@ ncleg. net
Representative Carolyn Justice
301C Legislative Office Building
Raleigh, NC 27603
O: 715- 9664 Email: Carolynju@ ncleg. net
Senator William Purcell
625 Legislative Office Building
Raleigh, NC 27603
O: 733- 5953 Email: Williamp@ ncleg. net
Representative Edd Nye
639 Legislative Office Building
Raleigh, NC 27603
O: 733- 5477 Email: Eddn@ ncleg. net
Senator Larry Shaw – Advisory Member
621 Legislative Office Building
Raleigh, NC 27603
O: 733- 9349 Email: Larrys@ ncleg. net
Rep. Earline Parmon – Adivsory Member
632 Legislative Office Building
Raleigh, NC 27603
O: 733- 5829 Email: Earlinep@ ncleg. net
Representative Fred Steen
514 Legislative Office Building
Raleigh, NC 27603
O: 733- 5881 Email: Fredst@ ncmail. net
iii
STAFF TO LOC
Kory Goldsmith, Research Division
O: 733- 2578
Email: koryg@ ncleg. net
Shawn Parker, Research Division
O: 733- 2578
Email: shawnp@ ncleg. net
Rennie Hobby, Committee Assistant
O: 733- 5639
Email: mentalhealthca@ ncleg. net
Ben Popkin, Research Division
O: 733- 2578
Email: benp@ ncleg. net
Jennifer Hoffman, Fiscal Research
O: 733- 4910
Email: Jenniferh@ ncleg. net
Andrea Russo, Fiscal Research
O: 733- 4910
Email: Andrear@ ncleg. net
Lisa Hollowell, Fiscal Research
O: 733- 4910
Email: lisah@ ncleg. net
1
PREFACE
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities, and Substance Abuse Services ( LOC) is established in Article 27 of Chapter
120 of the General Statutes. The LOC was charged with examining, on a continual basis, the
system- wide issues affecting the development, financing, administration, and delivery of mental
health, developmental disabilities, and substance abuse services, including issues related to
governance, accountability and quality of services. The Committee consists of sixteen
members, eight appointed by the President Pro Tempore of the Senate and eight
appointed by the Speaker of the House of Representatives. The members appointed by
the President Pro Tempore must include all of the following: at least two must be
members of the Senate Committee on Appropriations, the Chair of the Senate
Appropriations Committee on Human Resources and at least two must be of the
minority party. The members appointed by the Speaker of the House must include all
of the following: at least two members of the House Committee on Appropriations, the
Co- Chairs of the House of Representatives Appropriations Subcommittee on Health
and Human Services, and at least two members of the minority party. The Co- Chairs
for 2005- 2006 are Senator Martin Nesbitt and Representative Verla Insko.
2
COMMITTEE PROCEEDINGS
LEGISLATIVE OVERSIGHT COMMITTEE PROCEEDINGS
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services met on nine occasions during the 2006
interim. The following is a brief summary of the ( LOC) Committee’s proceedings.
Detailed minutes and information from each Committee meeting is available in the
Legislative Library and on the Oversight Committee webpage at
http:// www. ncleg. net/.
September 21, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services convened its first meeting of the interim on
Wednesday, September 21, 2005, at 10: 00 A. M. in Room 643 of the Legislative Office
Building.
Kory Goldsmith, Research Division and Lisa Hollowell, Fiscal Research Division,
presented an overview of the historical context and current goals of mental health
reform in North Carolina as enacted by House Bill 381 - the Mental Health System
Reform Bill.
Ms. Goldsmith identified the role of the local management entities ( LME) in
managing services. Ms. Hollowell explained the purpose and uses of the Trust Fund for
Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge
Funding, and gave the total appropriations since FY 2000- 2001 with adjustments and
expenditures.
Regarding the downsizing of state institutions, Ms. Hollowell said that the idea
was to shift funding from state institutions into the community as downsizing occurred.
She then reviewed a chart showing a total of 414 beds in the State's psychiatric hospitals
closed to date, and 33 Area Programs/ LMEs in place as of July 1, 2005, down from 40
Area Programs in 2001.
Leza Wainwright, Deputy Director of the Division on Mental Health,
Developmental Disabilities and Substance Abuse Services ( DMH), then gave an update
on activities relating to mental health reform efforts since the last committee meeting on
January 18, 2005, and reviewed the Mental Health Trust Fund expenditures for the year.
Representative Insko, Co- Chair, asked the following stakeholders to provide the
Committee with their comments: Consumer and family members – Betty Stansberry,
DD; Louise Fisher, MH and Jeff McLoud, MH; LMEs – Grayce Crockett, Mecklenburg;
Joy Futrell, Rowan/ Chowan and Tom McDevitt, Smokey Mountain; County
3
Commissioners Association – Patrice Roesler; Advocates – John Tote, MH Association
of N. C.; Dave Richard, ARC of N. C.; Providers – Sarah Wiltgen, Brynn Marr Behavioral
Healthcare; Trish Hussy, Freedom House; Jill Keel, Autism Society of N. C.; Robin
Huffman, N. C. Psychological Association; Suzie Kennedy, Life Enrichment Center of
Cleveland County; and Toni Camp, RN, Life Enrichment Center of Cleveland County;
Dan Herr, CFAC.
October 19, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its second meeting on Wednesday,
October 19, 2005, at 9: 00 A. M. at the Renaissance Hotel in Asheville, North Carolina.
Senator Martin Nesbitt, Co- Chair, introduced Larry Thompson and Beth
Melcher, consultants hired on a part- time basis to give the LOC their administrative and
clinical perspectives on the State MH/ DD/ SAS system and the current reform efforts.
Lisa Hollowell, Fiscal Research Division, addressed questions from the
September 21st meeting and reviewed ways the Mental Health Trust Fund may be used
in the reform effort.
Shawn Parker, Research Analyst, gave a synthesis of public comments from the
September 21st meeting, identifying areas of progress, areas of concern, and
recommendations of stakeholders.
Representative Insko, Co- Chair, reviewed a proposal for LOC work priorities
during the interim, noting that two major areas of concern were the capacity and
resources at the LME and Division levels to manage the system and the capacity to
deliver services.
Kory Goldsmith, Research Division, gave an overview of the LME role regarding
management and utilization review. G. S. 122C- 141( a), changes the role of area
programs from one of service providers to managers of services. G. S. 122C- 115.2( b)( 1),
provides the structure of the LME business plan, which governs how LMEs implement
their management roles.
David Swann, Director of Crossroads Behavioral Healthcare serving Iredell,
Surry, and Yadkin Counties, gave an LME perspective on reform by reviewing the nine
key functions of Crossroads' operational activities. He also described how access,
screening, triage and referral ( STR) and the utilization review ( UR) and service
management functions are provided at Crossroads.
Allyn Guffey, Acting Assistant Secretary for Finance and Business Operations for
( DHHS), addressed the Secretary’s proposal to centralize UR and STR functions and
reduce funding for the Department of Health and Human Services LME functions. He
gave a brief background of the system before reform explaining that the formula
developed to project the cost of the LME functions was based on 20 LMEs.
Senator Nesbitt then asked for public comments. The following members of the
public addressed the LOC: Jerry Rice, Mona and David Cornwell, Will Callison, Jere
Annis, Emma Thorne, Billie Gilfillan, Chris Melton, Dennis Huntley, Howard Graves,
4
Paula Cox, Sharon Thomas, Laurie Coker, Patricia McGivens, Nancy Baker, Julie
Millain, and Cherie Novak. The speakers expressed their needs and concerns as
MH/ DD/ SAS consumers and family members regarding reform.
Leza Wainwright, Deputy Director, DMH, then gave a report on the Mental
Health Trust Fund, showing anticipated expenditures of $ 24.7 million for fiscal year
2005- 2006, all of which are expected to be used during that time.
Mike Moseley, Director, DMH, gave a further explanation of the Secretary’s
proposal for Regional Utilization Review and centralized screening, triage and referral
services, explaining that reform legislation envisioned moving from 40 area programs
to 20 LMEs and that shifting certain management functions to a regional level is
expected to create efficiencies.
Kitty Barnes, Chair of the Catawba County Board of Commissioners and
President of the N. C. County Commissioners Association, provided a response to the
Secretary’s proposal. She explained the ways that counties are involved with LMEs.
Counties provide funding, perform administrative functions, provide physical locations
for some LMEs, and perform oversight of the jails. She voiced concern that the
timeframe for consolidation of the UR function ( by December 15, 2005) could make
continued provision of services by her LME difficult.
David Swann, responding to the Secretary’s proposal, voiced concern about the
short time frame for the regional UR consolidation. He also stated that the North
Carolina Council of Community Programs believes the proposal is premature.
November 9, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its third meeting on Wednesday,
November 9, 2005, at 9: 00 A. M. in Room 544 of the Legislative Office Building.
Ben Popkin, Research Division, gave a presentation on the law addressing LME
organization and governance structures, both pre and post- reform. Of the six options
available, only one ( the multi- county county program) requires a catchment area of at
least 200,000 in population or a minimum of 5 counties.
Shawn Parker, Research Division, gave an historic and current configuration of
area and county programs, providing the committee with maps of LME configurations
in both 1997 ( 41 area programs with populations ranging from 56,000 to 770,000) and
present day ( 29 catchment areas with populations ranging from 75,000 to 770,000). Mr.
Parker then reviewed progress since last year's report, highlighting service array, LME
functions and the status of the State institutions.
Lisa Hollowell, Fiscal Research Division, gave a presentation on developing
management capacity, detailing the LME functions and the allocations based on the
Cost Model SFY 2005- 2006 and showing the total amounts allocated for the nine
functions performed by each LME.
Kory Goldsmith, Research Division, then gave a broad explanation of powers
and duties of the Secretary of Health and Human Services. This included the
5
development of the State Plan, oversight of the operation of State facilities,
administration of the Mental Health Trust Fund, monitoring and oversight of LMEs,
and the protection of client rights.
Flo Stein, Chief of Community Policy Management, DMH, explained the
Division’s role in assisting LMEs with key function implementation, explaining that
much attention is being focused on the provider community in the areas of payment,
quality of services, provider management governance and infrastructure.
Dr. Michael Lancaster, Chief of Clinical Policy, DMH, gave an overview of
Crisis/ Emergency Services, explaining how crisis services are provided in the overall
reform system. He reviewed the screening process, discussed the differences in the 3
levels of crisis services ( emergent, urgent and routine), and stressed the importance of
having a community- based hospital that participates in the mental health system.
Marti Wagner, Regional Director of Operations for Telecare Corporation,
working primarily with Durham Center ACCESS as well as the Crisis Recovery Centers
at Kannapolis and Statesville, gave a presentation as a provider of crisis services,
focusing on programs and implementation, outcomes, challenges and barriers to crisis
services.
Julie Sinclair, Crisis Services Director for Southeastern Regional MHDDSAS,
reviewed the establishment and current operations of mobile crisis services in her area.
Mike Moseley, Director, DMH, gave an update on the Secretary’s Regional UR
proposal, pointing out the foundation that created the cost model and stating that the
LMEs have been unable or unwilling to achieve the economies of scale assumed by the
model.
Carol Clayton, Director of the N. C. Council of Community Programs, responded
to the Secretary’s proposal by requesting that the Secretary consider four points: 1)
allow local communities to make their own decisions about how to best partner and
create more efficiencies; 2) allow LMEs adequate time to digest the information and to
make changes; 3) provide specific information regarding the target the Secretary is
trying to achieve and how much money must be spent on the management function;
and 4) work together to create efficiencies in order to reallocate dollars.
Patrice Roesler from the Association of County Commissioners, responded to the
Secretary’s proposal, encouraging members to look at the public value financial
accountability, additional oversight gained by having proximity to the clients, and the
number of counties in each proposed region.
December 14, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its fourth meeting on Wednesday,
December 14, 2005, at 12: 30 P. M. in Room 544 of the Legislative Office Building.
Lisa Hollowell, Fiscal Research Division, gave a presentation on cash flow issues,
addressing cash flow problems at the State, LME, and provider levels.
6
Senator Nesbitt, Co- Chair, announced that an Advisory Committee made up of
three House members and three Senate members would be appointed to the LOC. He
welcomed Senator Larry Shaw to the meeting. Advisory members have an interest in
the issues, but serve as non- voting members who otherwise participate fully.
Kory Goldsmith, Research Division, provided an overview of the reform
legislation addressing the core services of screening, assessment, and referral. Twenty-five
of the twenty- nine LMEs had signed a performance contract with the State for 2004-
2007 that further specifies their obligations for these core services.
Susan Campbell, Manager of Access and Care Management of the Guilford
Center, spoke about an LME's experience in developing an access line and providing
this service. She introduced Jeff McCloud of the N. C. Mental Health Consumers
Organization who demonstrated how the access line worked by calling the Guilford
Center’s 1- 800 number. The committee listened to a conversation between Mr.
McCloud and a trained call center representative.
Committee members then listened to a discussion by LME directors and medical
directors regarding the factors and barriers affecting the development of LME
functions. The panel included: Joy Futrell, Area Director, Roanoke- Chowan Human
Services Center; Ms. Ellen S. Holliman, Area Director, Durham Center; Dr. Beth Stanton,
Medical Director, New Vistas Behavioral Health Service, Asheville; and Mr. Michael
Watson, Area Director, Sandhills Center.
Mike Moseley, Director, DMH, then gave a Division update on regional UR and
the status of the Medicaid State Plan amendment. He explained that the Federal
Centers for Medicare and Medicaid Services ( CMS) delay in the approval of the new
Service Definitions continued to be a major destabilizing issue.
January 26, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its fifth meeting on Thursday, January
26, 2006, at 9: 30 A. M. in Room 643 of the Legislative Office Building.
Representative Insko, Co- Chair, asked Leza Wainwright, Deputy Director, DMH,
to come forward and give an overview of community services for the Developmental
Disabilities ( DD) population. Ms. Wainwright began with an explanation of the topics
covered in her presentation, explaining how DD was defined in G. S. 122C- 3( 12a) and
listed the State funded services for DD. Ms. Wainwright then reviewed the Medicaid
funded DD services explaining the criteria for ICF/ MR ( Intermediate Care
Facility/ Mental Retardation) eligibility and the guidelines for Home and Community
Based waivers. The average cost per person, per waiver last year was $ 43,000 and the
average for ICF/ MR was $ 86,000.
Diann Irvin, Section Chief, Behavioral Support Services with the Department of
Public Instruction, addressed how public schools were going to identify those children
who would lose CBS services in schools and how the services might be replaced.
7
Dave Richard, Director of the ARC of North Carolina and representing the DD
Consortium, said that the Consortium responded favorably to the Department’s plan to
replace CBS services, but expressed concern over the short amount of time the LMEs,
provider organizations, and State agencies had for implementation.
Representative Insko then asked a panel consisting of a consumer, a provider, a
family member and advocates to give their experiences with community services for the
DD population. Participating in the panel were: Jill Hinton Keel, Director of the Autism
Society of North Carolina; Kathy Bryan, Director of Orange Enterprises; Laura Gorycki,
an advocate for individuals and families from the Enrichment Center in Winston- Salem;
Jim Woolsey, a parent of a developmentally disabled son; and Rose Reaves, a consumer.
Mike Moseley, Director, DMH, gave an update on the CMS approval of the new
service definitions and stated that the new services would become effective March 20,
2006. Mr. Moseley briefly covered the Provider endorsement process and said that since
the State Plan amendment was approved, 646 providers had been endorsed statewide.
Mr. Moseley then gave an update on the Secretary’s proposal for regional Utilization
Review ( UR) and Screening, Triage and Referral ( STR), providing an estimated net cost
savings of $ 14.5 million in State dollars.
Leza Wainwright, Deputy Director, DMH, addressed the requirements of the use
of non- Medicaid funds. She addressed the ability of LMEs to shift funds from one
age/ disability category to another.
February 16, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its sixth meeting on Thursday, February
16, 2006, at 9: 00 A. M. in Room 643 of the Legislative Office Building.
Leza Wainwright, Deputy Director, DMH, reviewed the new and modified
service definitions for adults and children with mental illness. She stated that the new
service definitions would go into effect March 20, 2006, because according to CMS
requirements, the definitions have to be implemented in the same quarter in which they
are approved. Ms. Wainwright then spoke about a range of service definitions and
discussed a wide range of anticipated issues in implementing those definitions.
Senator Nesbitt, Co- Chair, asked panelists to comment on barriers, challenges
and recommendations to develop service capacity for mental health services. The
panelists were: Becky Faucette, a family member of an adult with mental illness;
Charles Davis, Director, NC Mentor; Anita Harrison, a parent of a child with a mental
illness; and Tisha Gamboa, a consumer of mental health services and Executive Director
of the NC Mental Health Consumers’ Organization.
Senator Nesbitt then asked the substance abuse services panelists to give their
comments regarding barriers, challenges and recommendations. The SAS panelists
included: Margaret Stargell, CEO of Coastal Horizons; Tamiko Cory consumer in
recovery; Larry Coley, consumer in recovery; and Tim Hall, Chair of the Substance
Abuse Federation.
8
Senator Nesbitt then asked the following panelists to comment on the role of
consumers in reform: Dan Herr, Chair, Orange- Person- Chatham County Consumer and
Family Advisory Committee ( CFAC); Jeff McLoud, Vice President, NC Mental Health
Consumer’s Organization; Carol Matthieu, Member of Rockingham County CFAC; and
Ron Huber, Member, State CFAC.
Arey Grady, board member of the Neuse Center LME, gave comments regarding
the role of the local board in reform and identified challenges facing local boards.
Flo Stein, Chief of Community Policy Management, DMH, then spoke on the
new service definitions for Substance Abuse Services, noting that the new definitions
would include a more credentialed workforce and generate more Medicaid funding
than is currently available.
March 22, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its seventh meeting on Wednesday,
March 22, 2006, at 9: 00 A. M. in Room 643 of the Legislative Office Building,
Carol Shaw, Fiscal Research Division, gave a presentation on Medicaid eligibility
criteria and presented case studies to clarify what types of individuals and situations
would and would not qualify for Medicaid coverage.
Lisa Hollowell, Fiscal Research Division, reviewed the 2- year historical budget
information for DMH and presented the authorized budget of the current year. Ms.
Hollowell then defined the target populations in each of the disability groups and the
types of services available to those persons.
Ms. Hollowell explained the method and assumptions she used in calculating an
estimation of need for additional funding in North Carolina. She also explained a chart
showing 2005 year- end service data listing each LME, the total population served, the
year- end budget and expenditures, service dollar allocation per capita, and the average
spent on services per client. Ms. Hollowell then gave an update on State Psychiatric
hospital downsizing, reviewed the provisions of law showing the direction the General
Assembly provided regarding savings and recurring and non- recurring savings that are
generated from the closure of beds, and reviewed the annual recurring savings.
Kory Goldsmith, Research Division, gave a review of the special provisions
regarding various studies DMH had been directed to undertake, including a study of
the financing of the MHDDSAS system originally due July 1, 2005, now due March 1,
2006.
Phillip Hoffman, Chief of Resource/ Regulatory Management, DMH, apologized
for the delay of the Finance Study report and provided members with an update and an
estimated June 2006 delivery date.
Steve Hairston, Chief of Operations Support, DMH, addressed service gaps and
the Long Term Plan for meeting MHDDSA service needs and announced that a final
report would be submitted June 30, 2006.
9
Leza Wainwright, Deputy Director, DMH, gave an update on regional
Utilization Review and Screening, Triage and Referral ( UR/ STR) with a brief overview
of the application and evaluation process for selecting LMEs to perform UR functions.
A review team determined that no LME met the required standards. This means the
current Medicaid contractor doing UR for MHDDSA services and previously selected
through an RFP process ( Value Options) will perform all Medicaid UR functions with
the exception of the five counties that comprise the Piedmont catchment area.
The review committee identified five LMEs to perform regional after hours STR.
There were some partnerships where a program was not identified as having the
capacity to perform the function. A decision as to how to perform the after hours STR
in those catchment areas will be determined at a later date.
April 12, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its eighth meeting on Wednesday, April
12, 2006, at 1: 30 P. M. in Room 643 of the Legislative Office Building.
Kory Goldsmith, Research Division, reviewed a packet of information that
addressed committee member questions from the previous meeting. They included
residency requirements by Medicaid; the use of target populations in other states; a
chart showing contributions by each county to its LME; and questions regarding
Utilization Review ( UR) and Screening, Triage, and Referral ( STR).
Representative Insko, Co- Chair, recognized two nationally known experts, Val
Bradley with the Human Services Research Institute and Steve Day from Technical
Assistance Collaborative, to present an outline of qualitative measures that the federal
government and states like North Carolina are utilizing to measure system success.
North Carolina already collects most of the data mentioned in the various domains to
be measured – data in claims files; demographic information in the client data
warehouse; consumer outcomes indicators; quarterly and annual reports from the
LMEs; and the National Core Indicators pilot project. Given that North Carolina has the
data, what remains is the need to be open to an analysis of the data and interpretation
among stakeholders.
Flo Stein, Chief of Community Policy Management, DMH, gave a brief overview
of how the Division is gathering and using data and other indicators. Spencer Clark,
Director of Operations and Clinical Services, DMH, gave an overview of reports that are
currently produced to show the kind of data in existence and how it might be
presented.
Kory Goldsmith, Research Division, presented the draft findings and
recommendations of the LOC. The findings and recommendations addressed: building
community capacity and financing reform, facility- based and non- facility based crisis
services; the Department of Health and Human Services and the Division of
MH/ DD/ SAS.
10
Senator Nesbitt, Co- Chair, asked members to review the document and to make
changes or recommendations so staff could revise the report in time for the next
meeting. He said the total amount of the proposal was $ 104,598,000 in recurring funds
and $ 55,000,000 in non- recurring funds. Senator Malone suggested that a statement be
included in the narrative recognizing that the Department had not been given adequate
funding to make system reform succeed. Senator Nesbitt added that there had also been
a recession that created additional problems.
April 27, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services met on Thursday, April 27, 2006, at 1: 30 P. M.
in Room 544 of the Legislative Office Building.
Representative Insko, Co- Chair, said that many comments had been received and
incorporated into the revised proposals and other comments were under consideration.
She also said that the proposals would be in bill form to be approved at the next
meeting on May 10th.
Kory Goldsmith, Research Division, and Andrea Russo, Fiscal Research,
reviewed the revised proposals.
Members suggested adding a provision to the report stating that any savings
realized from financing the 400 independent and supportive living apartments be used
to assist the Healing Place and others similar establishments.
Representative Insko then asked members of the public who had signed- up prior
to the meeting to come forward and provide the Committee with their thoughts on the
proposals. Those addressing the Committee were: David Swann, Mike Watson, Mary
Short, Martha Brock, Jay Zamagoca, Robin Huffman, Chris Estes, Laurie Coker, Dave
Richard, Will Callison, Sally Cameron, Louise Fisher, Paula Cox Fishman, Carol
Matthew, Mark Botts, Margaret Weller- Stargell, and Nancy Carey.
Senator Nesbitt, Co- Chair, suggested that the Committee add a paragraph to the
report to increase insurance coverage for mental health and to move parity ahead. He
also suggested adding a statement in the Introduction stating that this effort is a first
step in the solution to reform and the LOC will continue to work and make
recommendations to the General Assembly as it moves forward.
May 10, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities and
Substance Abuse Services met on Thursday, May 10, 2006, at 2: 00 P. M. in Room 643 of the
Legislative Office Building.
Representative Insko, Co- Chair, asked Kory Goldsmith, Research Division and Andrea Russo,
Fiscal Research, to explain changes to the draft report.
11
Ms. Russo reviewed the first of nine legislative proposals which included a brief overview
followed by the bill drafts. On Proposal number 4, Senator Nesbitt offered an amendment to
Section 4 authorizing the Secretary to hire three positions for a Local Management Entity
Strategic Assistance Team to assist local management entities develop, implement, and maintain
their statutory responsibilities. The amendment was adopted.
Representative Insko offered an amendment to Proposal number 5, Section 17 that would clarify
that counties have the general authority to provide mh/ dd/ sa services as a public provider.. The
amendment was adopted by the committee.
Senator Nesbitt made the motion that the report be approved as amended and to authorize staff to
make technical corrections as necessary. The motion was approved by the Committee.
12
COMMITTEE FINDINGS
AND LEGISLATIVE PROPOSALS
Introduction
In 2001, the General Assembly adopted significant reform legislation to
restructure how services to those with mental illnesses, developmental disabilities
and substance abuse issues would be delivered. The foundations of reform
included: local management of the system, decreased reliance on State institutions,
community based best practice treatments, increased consumer involvement, access
to multiple and qualified providers, and performance and fiscal accountability to
the State and local governments. As part of the legislation, the General Assembly
directed the Secretary of DHHS (" Secretary") and the Division of Mental Health,
Developmental Disabilities, and Substance Abuse Services (" Division") to undertake
administering massive system reform. The reform has been overseen by the
General Assembly and the Joint Legislative Oversight Committee on Mental Health,
Developmental Disabilities, and Substance Abuse Services ( LOC).
The reform effort never assumed that the system was adequately or fairly
funded. It did attempt to shift resources from the State to the local level, to target
services to those with the most severe disabilities, and to gain administrative
efficiencies and economies of scale through consolidation. In 2001, the General
Assembly created the Mental Health Trust Fund and made a significant
appropriation of $ 50 million to assist reform. However, reform has taken place
during a time of significant budget shortfalls and intervening events have severally
diminished both the size of the Trust Fund and the State's ability to make up the
13
shortfalls. As a result, during the five years of implementation, the State has not
fully funded existing programs nor provided sufficient funds to build service
capacity at the local level. LOC staff has estimated that it would cost $ 172,585,338
to bring the current level of services to all who are eligible and who would also seek
services. This figure does not take into account any increase in the array or
availability of services. Other estimates of the State's need range from an additional
$ 475 million to fully fund substance abuse services over 5 years and $ 285 million to
bring North Carolina's per capita spending for mental health services near the
national average.
In recognition of these shortcomings, the LOC makes the findings and
proposals on the following pages. The total appropriations recommended herein
are $ 156,603,769. Of that, $ 100.3 million are recurring funds and $ 56.3 million are
non- recurring. The LOC recognizes that additional funds will need to be
appropriated in the future to fully implement a mental health, developmental
disabilities, and substance abuse system. However, the proposals in this report
constitute a bold step forward. The LOC believes this is an appropriate amount of
new funding at this point in time and that it will move the system significantly
towards its goals.
1. State Funding for MH/ DD/ SA Services and Funding Allocations
The total ( state and federal) actual expenditures for FY04/ 05 for the mental
health, developmental disabilities, and substance abuse system ( MH/ DD/ SA) were
$ 1,102,393,603.1 Of those funds, 52% or $ 575,965,746 paid for the State institutions
and 3% or $ 36,597,727 paid for administration. The remaining 44% or $ 489,830,130
was used to pay for community programs. Of the total funds appropriated by the
State, $ 580,479,364 ( or 53%) were state funds.
1 This amount does not include Medicaid funds flowing to the community or directly to providers.
14
In FY2005, the average State funds expended per person served with a
developmental disability were $ 10,192. The average State funds expended per
person served with a mental illness were $ 1,001. The average State funds expended
per person served with a substance abuse diagnosis were $ 1,028. During FY2005,
the State paid a total of $ 124,951,834 in claims for developmental disability services,
$ 87,037,667 in claims for mental health services, and $ 28,702,300 for substance abuse
services.
According to “ The State of the States in Developmental Disabilities: 2005” by
the Department of Psychiatry and Coleman Institute for Cognitive Disabilities at the
University of Colorado, North Carolina ranks 26th in “ fiscal effort” 2 in total
spending for MR/ DD services. Applying this same measure for mental health
services and substance abuse services, North Carolina ranked 44th in fiscal effort for
mental health services and 27th in fiscal effort for substance abuse services3.
According to a report issued by the North Carolina Psychiatric Association, it
would cost an additional $ 285,500,000 to bring North Carolina's per capita spending
on mental health services to 88.8% of the national per capita spending in FY2002-
2003.4 According to the 2001 report to the LOC by MGT of America5, the estimated
cost of implementing a complete substance abuse system in North Carolina over a
5- year period would require an additional $ 71,000,000 funding in FY 2003,
2 In this report, “ fiscal effort” is defined as spending for services per $ 1,000 of aggregate
statewide personal income.
3 For mental health services “ fiscal effort”, staff used the data from National Alliance on Mental
Illness. Grading the States: A Report on America's Health Care system for Serious Mental Illness,
published March 1, 2006. For substance abuse services, staff used statewide substance abuse
spending data obtained from SAMHSA and population and income figures from the 2000 Census.
4 The 88.8% figure represents North Carolina's average income in relationship to the national
average income.
5 MGT of America. Study of Mental Health/ Substance Abuse Facilities and Their Role in North
Carolina's System of Care, Final Report to the Joint Legislative Committee on Mental Health,
Developmental Disabilities, and Substance Abuse Services, October 2001.
15
$ 74,000,000 for FYs 2004 and 2005, and an additional $ 127,000,000 in FYs 2006 and
2007. According to information provided to the LOC by committee staff, the
estimated State funds that would be needed to serve the estimated target
populations who are not Medicaid eligible and who would seek public services
would be $ 172,585,338.6 This amount represents what it would cost to serve more
consumers based on current State spending per consumer.
Unlike Medicaid, access to State- funded services is not an entitlement. It is
the primary source for indigent care and services not covered by Medicaid. State
funding for services has remained stagnant since 2001. There have been small,
isolated budget increases mixed with budget reductions. There have been no
inflationary increases. During this same time period, North Carolina's population
has increased by an estimated 7%.
Due to changes in federal policy, the service known as Developmental
Therapies will no longer be a Medicaid reimbursable service when provided to
developmentally disabled individuals. Because of this change, the Division has
submitted, and it is the LOC's understanding that the Governor's Budget will
include, a request for $ 29,435,119 in recurring funds to cover the service. While the
LOC does not oppose this request, if funded, it will have the effect of further
exacerbating the disparity between the State expenditures for disability groups.
Most of the State appropriations are divided into disability and age
categories, and the units of local government that administer and manage the
MH/ DD/ SA system ( LMEs) are restricted from shifting funds between disabilities.
LMEs report having difficulty spending down certain funds, especially related to
substance abuse services.
6 Fiscal Research Division, Budget Overview of the Division of Mental Health, Developmental
Disabilities, and Substance Abuse Services, March 2006.
16
There is no equitable or rational allocation of State funds between LMEs.
Excluding Cross Area Service Program funding, the highest SFY 2005- 2006 State
Service Dollar allocation per capita of catchment area is $ 48.18, and the lowest is
$ 21.80. The State allocation per capita is $ 34.15. The median State service dollar per
capita is $ 37.65. Although the reform legislation of 2001 recognized the need to
address this situation, to date, neither the LOC nor the Division have developed
any recommendations.
2. Building Community Capacity/ Financing Reform
In 1999, the United State Supreme Court held in Olmstead v. L. C. and E. W.
that states have an obligation to provide community- based treatment for persons
with mental disabilities. In 2001, the General Assembly created the Mental Health
Trust Fund ( Trust Fund, G. S. 143- 15.3D) and appropriated $ 50 million to it. In that
same year, the Governor used his emergency powers to transfer $ 37.5 million from
the Trust Fund due to the budget crisis. Although the General Assembly has
appropriated over $ 30 million to the Trust Fund since 2001, those amounts have not
been sufficient to replace what was lost and have not been sufficient to successfully
implement system reform.
The LOC recognizes that affordable and appropriate housing is a critical
element of a community's capacity to successfully transition MH/ DD/ SAS
consumers from institutions to the community. There are not sufficient affordable
and appropriate housing resources for MH/ DD/ SAS consumers in this State and
that situation significantly impedes the State's ability to comply with Olmstead.
G. S. 143- 15.3D( b) provides that the purposes for which the funds in the Trust
Fund may be used are:
17
( 1) Start- up and operating support for cost- effective community
treatment alternatives for individuals currently residing in the State's mental
health, developmental disabilities, and substance abuse services institutions.
( 2) Facilitate the State's compliance with the United States Supreme Court
decision in Olmstead v. L. C. and E. W.
( 3) Facilitate reform of the mental health, developmental disabilities, and
substance abuse services system and expand and enhance treatment and
prevention services in these program areas to remove waiting lists and
provide appropriate and safe services for clients.
( 4) Provide bridge funding to maintain appropriate client services during
transitional periods as a result of facility closings.
( 5) Construct, repair, and renovate State mental health, developmental
disabilities, and substance abuse services facilities.
The 2001, 2003, and 2005 budgets provide that recurring savings realized
from downsizing of the of State psychiatric hospitals would be retained by DHHS
for implementation of the hospital downsizing and to support the recurring costs of
additional community- based placements. In 2003, the General Assembly passed the
Psychiatric Hospital Financing Act ( S. L. 2003- 314). It provided that the new
psychiatric hospital would be financed through certificates of participation. It also
amended the Mental Health Trust Fund to provide that recurring savings realized
from the closure of any State psychiatric hospitals would not revert to the General
Fund but would be used for the payment of debt service for the construction of a
new State psychiatric hospital. Any remainder not needed for the debt service was
to be credited to the Department of Health and Human Services to be used only for
compliance with the Olmstead decision and to facilitate mental health reform. The
provisions regarding the use of recurring savings from hospital downsizing
18
contained in the 2005 Budget and in the Psychiatric Hospital Financing Act appear
to be inconsistent.
Downsizing of the State psychiatric hospitals has slowed substantially in the
last few years due to the lack of community capacity to successfully place
MH/ DD/ SAS consumers in the community. The estimated debt service on new a
psychiatric hospital for State fiscal year 2006- 2007 will be $ 6,206,680. To date, the
Division has realized $ 3.4 million dollars in recurring savings from downsizing the
Dorothea Dix and John Umstead psychiatric hospitals that can be used to offset the
projected debt service in FY 06- 07 and thereafter. There are not sufficient savings
being realized from downsizing to meet fully the debt service cost, and there are no
excess funds to shift to community programs.
The apparent inconsistency regarding the use of recurring savings from
downsizing combined with the delay in realized savings from downsizing impedes
the State's ability to comply with Olmstead and implement system reform.
According to a collaborative project published by the North Carolina Health
Education Centers ( NC AHEC), the Department of Psychiatry and Behavioral
Sciences, Duke University School of Medicine, and the Cecil G. Sheps Center for
Health Service Research, UNC- CH, 7 North Carolina ranks 20th in the nation in
psychiatrists per 10,000 population, but due to the state's rapid populations
increases, that situation is expected to worsen in the coming years. In addition, 44
counties have a shortage of general psychiatrists, and 43 counties have no child
psychiatrists. Also, due to the slow growth in the supply of psychiatrists, public
mental health provider groups and especially rural provider groups face stiff
competition in recruiting and retaining psychiatrists to their practices. According to
7 " The Supply and Distribution of Psychiatrists in North Carolina: Pressing Issues in the Context of
Mental Health Reform, January 2006.
19
a report published by the National Conference of State Legislators8 almost one in
five children in the U. S. has a diagnosable mental disorder. However, only about
20- 25% of those children receive treatment. The gap in treatment is attributed in
part to the lack of child and adolescent psychiatrists. Some states are addressing
these issues by expanding the use of telemedicine practices to serve children in
rural areas. Congress is considering establishing education incentives to recruit
child psychiatry residency programs with an estimated cost of $ 45 million for FY
2006 to 2007.9
3. Facility- based and Non- Facility based Crisis Services
G. S. 122C- 2 provides that, within available resources, State and local
government shall ensure that certain " core services", including emergency services,
are available to all persons in this State. G. S. 122C- 115.2( b)( 1) h. requires area
authorities and county programs to develop a business plan that ensures access to
core services, including crisis services. G. S. 122C- 117( a)( 14) provides that crisis
services do not require prior authorization, shall be designed for prevention,
intervention and resolution, do not consist solely of triage and transfer, and shall be
provided in the least restrictive setting possible consistent with individual and
family needs and community safety.
Appropriate crisis services are not consistently available across the State.
There are not a sufficient number of community hospital psychiatric beds to meet
local needs. At least three catchment areas have no community hospital psychiatric
beds available. At least four catchment areas have no facility- based crisis services
available, and those facilities that are available frequently serve limited populations.
8 " Child Psychiatrist Shortage Looms", Michelle Herman, March 2006.
9 The Child Health Care Crisis Relief Act ( H. R. 1106/ S 537).
20
Certain crisis services, especially those that are facility- based, must serve large
regions in order to be cost effective.
Area authorities and county programs do not have sufficient " start- up" funds
to develop and establish new crisis services. There are inadequate State funds to
pay for crisis services to the non- Medicaid eligible population.
Certain crisis services must be available at all times regardless of whether the
service is being utilized at any particular time. However, the fee for service
structure makes it difficult for area authorities and county programs to ensure that
necessary professionals will be accessible at all times. It is not clear whether the
approved rate for psychiatrists will be sufficient to assure that those services will be
available on a continuous basis.
4. Department of Health and Human Services/ Division of MH/ DD/ SAS
In 2001, the General Assembly directed the Secretary of DHHS and the
Division of MH/ DD/ SAS to undertake administering massive system reform. This
reform has taken place during a time of budget crisis and changing federal
requirements. While recognizing that this undertaking has been extremely
challenging, that the State has not fully funded the system, and that the task is not
finished; in order to be successful, the Secretary and the Division must demonstrate
strong leadership and vision in the future.
The State Plan has been reissued each year but has not functioned as the
strategic planning document that the General Assembly requested. In particular, it
is not clear whether the plans are cumulative or supersede each other, which tasks
have been accomplished and which are left to be done, and whether system reform
is improving services to consumers.
The Secretary has failed to adopt rules as directed under G. S. 122C- 112.1,
failed to utilize her authority when approving business plans to move area
21
authorities and county programs towards greater administrative efficiencies, and
has implemented policy in a manner that produced distrust among stakeholders
and threatened to further destabilize a fragile system.
The Division has allowed the time- lines for State and local implementation to
become disconnected, has failed to provide sufficient technical assistance to LMEs,
and has been reluctant to impose " State- wideness" in situations where uniform
standards have been necessary.
5. Local Management Entities ( LMEs)
The role of local MH/ DD/ SAS programs changed significantly under
system reform from that of a service provider to a manager of services. As a result,
local programs may only provide services if they receive a waiver from the
Secretary. The managerial powers and duties of local programs are not as clearly
defined and must be inferred from the statutory requirements of the local business
plan.
The responsibility of LMEs to conduct utilization review ( UR) for Medicaid
services is not clearly articulated in Chapter 122C. It appears that LMEs were
expected to develop that capacity for the following reasons: the LME cost model
includes funding for this function; the Division solicited applications from LMEs to
receive approval to implement the function; and the 2005 RFP for a state- wide
Medicaid UR vender provided that between 2 and 6 LMEs were expected to
conduct UR during the contract period. Despite these expectations, the Secretary
has determined that all Medicaid UR will be conducted by a state- wide vendor for
at least the next three years. While the LOC recognizes the Secretary's obligation
under Medicaid to ensure " State- wideness", it finds that the process she undertook
to implement this significantly undermined the stability of the public system. The
LOC also finds that by removing this function from the public sector, the Secretary
22
may significantly undermine the ability of LMEs to manage services in their
catchment areas. In light of these changes, the LOC finds that utilization review for
State- funded services and screening, triage and referral of all crisis calls are
necessary components to the management role of local programs.
In 2001, the General Assembly directed the Secretary to develop a plan to
accomplish the consolidation of area authorities so that by January 1, 2007, there
would be 20 total programs. While Chapter 122C does specifically mandate
consolidation, the General Assembly's intent was clear. The Secretary did not
utilize her statutory authority to achieve consolidation through the approval of
local business plans and there are currently 29 LMEs. According to the Secretary's
report to the General Assembly, there are very few additional mergers to be
realized. The LOC finds that additional consolidations are necessary to accomplish
system reform.
In 2001, the General Assembly recognized that competent management was
critical to the success of system reform. It amended G. S. 122C- 121( d) to provide
that area programs directors must have a master's degree, as well as related and
managerial experience. The LOC finds that the success of an area program is
largely dependent upon the ability of the director to understand and implement
system reform. It also finds that the current statutory qualifications are drawn very
broadly and may not capture the necessary skills. The LOC also finds that the
position of the LME finance officer is critical to sound fiscal management, but there
are no statutory requirements for that position.
G. S. 122C- 119.1 requires all area board members to " receive initial
orientation" on their responsibilities. It also requires DHHS to provide training in
" fiscal management, budget development, and fiscal accountability". The LOC
23
finds that it is critical that board members receive this training and that there
should be some mechanism to enforce this requirement.
6. Consumers
In 2001, the General Assembly recognized the importance of consumers in
system reform. It directed that the State Plan provide for “ consumer involvement
in planning and management of system services”. The State Plan directed that each
LME establish a local Consumer and Family Advisory Committee ( CFAC) and
charged the CFACs with participating in and commenting on the LMEs business
plans and operating budgets. The State Plan also created the State CFAC, whose
members are appointed by the Secretary.
The LOC finds that it is important to focus and formalize the advisory role of
consumers in system reform. It also finds that representation on the State CFAC
should be broadened to include appointments by other stakeholders.
7. Providers
Providers are one of the major components in system reform and service
delivery. The success of reform depends in large part upon a provider system in
which high quality services are available in sufficient quantity to meet the identified
needs of consumers. However, at the same time that the public system has needed
more and better providers to deliver services, a variety of circumstances have made
it very difficult for both established and newly created providers to survive
financially.
LMEs have adopted differing provider contracts and required differing
levels of utilization control. There has not been a uniform definition of what
constitutes a clean claim, resulting in confusion in what is required for billing and
delays in payments. Providers also report excessive and unnecessary paperwork in
order to obtain authorization to provide services.
24
System reform also requires providers to implement new services based
upon evidence based- practices. Utilization of these best practices will result in
better services to consumers, and will be a better use of public funds because the
services have been shown to be more effective.
The Division has developed a Provider Action Agenda to address many of
these issues. The authority of the Division to implement uniform processes and
procedures should be clarified.
8. Joint Legislative Oversight Committee on
Mental Health, Developmental Disabilities, and Substance Abuse Services
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services was created in 2000 to develop a plan for
reform of the MH/ DD/ SA system. The committee and its multiple subcommittees
met repeatedly during the interim and into the Regular Session of the 2001 General
Assembly. The resulting legislation ( HB 381, S. L. 2001- 437) significantly
restructured the system and put in place the framework of reform. The foundations
of reform include: local management of the system, decreased reliance on State
institutions, community based best practice treatments, increased consumer
involvement, access to multiple and qualified providers, and performance and
fiscal accountability to the State and local governments.
The LOC is charged with examining on a continuing basis system- wide
issues affecting the development, financing, administration, and delivery of
MH/ DD/ SA services. It is also charged with studying the budget, programs,
administrative organization, and policies of DHHS to determine ways in which the
General Assembly may encourage improvement in mental health, developmental
disabilities, and substance abuse services provided in North Carolina. In this
capacity, the LOC has replaced the Legislative Study Commission on Mental
25
Health, Developmental Disabilities, and Substance Abuse Services ( Commission) as
the legislative entity monitoring the MH/ DD/ SA system. The Commission has
been inactive since passage of the reform legislation, and all reports previously
submitted to the Commission now come to the LOC.
9. Increased Insurance Coverage
The LOC recommends that private and public insurance providers increase
the amount of coverage they offer their members, and that the coverage include
treatment for mental illness and substance abuse.
Conclusion
The Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services makes the following eight
recommendations to the 2006 Regular Session of the 2005 General Assembly. Each
proposal is followed by a bill draft and, if it has a fiscal impact, a fiscal
memorandum indicating any anticipated revenue gain or loss resulting from the
proposal.
1. Increase State funding for MH/ DD/ SA Services
2. MH/ DD/ SA Community Capacity/ Financing Reform
3. Increase MH/ DD/ SA Crisis Services
4. Strengthen State MH/ DD/ SA Reform
5. Strengthen LMEs
6. Consumer and Family Advisory Committees
7. Strengthen MH/ DD/ SA Private Providers
8. Strengthen LOC Oversight Role
26
LEGISLATIVE PROPOSAL # 1
INCREASE STATE FUNDING FOR MH/ DD/ SA SERVICES
27
LEGISLATIVE PROPOSAL # 1:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO INCREASE STATE FUNDING AND FLEXIBILITY FOR
MH/ DD/ SA SERVICES.
SHORT TITLE: Increase State funding for MH/ DD/ SA Services
BRIEF OVERVIEW: This bill would:
1. Appropriate $ 72,888,259 ( recurring) to be used for state- funded services to be
allocated as follows:
a. $ 29,435,119 for Development Therapy services for the developmentally
disabled.
b. $ 21,726,070 to be used for State funded mental health services.
c. $ 21,726,070 to be used for State funded substance abuse services.
d. The funds allocated for mental health and substance abuse services would
be allocated to those LMEs whose current state service dollar allocation per capita is
less than the median State service dollar per capita allocation ($ 37.65) based on the
SFY 05- 06 allocations.
2. Allow LMEs the flexibility to shift up to 15% of their funds between age and
disability categories. This provision would sunset July 1, 2007.
EFFECTIVE DATE: This bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
28
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 23 [ v. 8] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 11/ 2006 10: 32: 54 AM
Short Title: Increase State funding for MH/ DD/ SA Services. ( Public)
Sponsors: .
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO INCREASE STATE FUNDING AND FLEXIBILITY FOR MENTAL
3 HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
4 SERVICES AS RECOMMENDED BY THE JOINT LEGISLATIVE OVERSIGHT
5 COMMITTEE FOR MENTAL HEALTH, DEVELOPMENTAL DISABILITIES
6 AND SUBSTANCE ABUSE SERVICES.
7 The General Assembly of North Carolina enacts:
8 SECTION 1. There is appropriated from the General Fund to the
9 Department of Health and Human Services the sum of seventy- two million eight
10 hundred eighty- eight thousand two hundred fifty- nine dollars ($ 72,888,259) for the
11 2006- 2007 fiscal year that to be allocated as follows:
12 1. $ 29,435,119 to pay for developmental therapies for the
13 developmentally disabled. The Division shall develop rigorous care
14 management requirements for this service.
15 2. $ 21,726,070 to pay for mental health services.
16 3. $ 21,726,070 to pay for substance abuse services.
17 4. The funds allocated under subsections ( 2) and ( 3) of this section shall
18 be allocated to those area authorities and county programs where the
19 current state service dollar allocation per capita is less than the median
20 state service dollar per capita allocation, which is $ 37.65 based upon
21 the State fiscal year 2005- 2006 allocations.
22 SECTION 2. Notwithstanding G. S. 143- 23, an area authority or a county
23 program may transfer from one age or disability category to a different age or disability
24 category up to fifteen percent ( 15%) of the funds initially allocated to the age or
25 disability category from which funds are being transferred. Area authorities and county
26 programs shall:
29
1 ( 1) publicly document that they have addressed the service needs of the
2 category from which the funds are being transferred before any
3 transfer may occur, and
4 ( 2) submit the required documentation to the Division of Mental Health,
5 Developmental Disabilities and Substance Abuse Services and to the
6 Fiscal Research Division within 15 days of making the transfer.
7 SECTION 3. This act becomes effective July 1, 2006. Section 2 expires
8 July 1, 2007. The Fiscal Research Division shall track the allocation and utilization of
9 the funds appropriated under this act.
10
30
LEGISLATIVE PROPOSAL # 2
MH/ DD/ SA COMMUNITY
CAPACITY/ FINANCING REFORM
31
LEGISLATIVE PROPOSAL # 2:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO APPROPRIATE FUNDS TO INCREASE INDEPENDENT AND
SUPPORTIVE LIVING APARTMENTS FOR PERSONS WITH MH/ DD/ SA
DISABILITIES; TO REVISE THE PSYCHIATRIC HOSPITAL FINANCING ACT; TO
CREATE INCENTIVES FOR PSYCHIATRISTS TO WORK IN UNDERSERVED
COMMUNITIES; AND TO APPROPRIATE FUNDS TO THE MENTAL HEALTH
TRUST FUND.
SHORT TITLE: MH/ DD/ SA Community Capacity/ Financing Reform
BRIEF OVERVIEW: This bill would:
1. Finance 400 independent- and supportive- living apartments for individuals with
MH/ DD/ SA disabilities.
a. Appropriate $ 12,050,830 ( non- recurring) to provide an operating cost subsidy for
the apartments for 10 years.
b. Appropriate $ 11,250,000 ( non- recurring) to the North Carolina Housing Trust fund
to finance the apartments.
2. Appropriate $ 713,000 ( recurring) for on- going operations support and $ 370,000 for
start- up expenses ( non- recurring) to support 12 group home beds and 93 apartments
financed through the United States Department of Housing and Urban Development .
3. Appropriate $ 20,000,000 ( non- recurring) to the Mental Health Trust Fund.
4. Appropriate $ 6,206,680 ( recurring) for hospital debt service and reconcile the
provisions of the Psychiatric Hospital Financing Act and the 2005 Budget so that debt
service is paid from appropriations and savings from downsizing are used for building
community capacity.
5. Appropriate $ 1,000,000 ( recurring) to AHEC/ Rural Health Program to develop a
program, which may include loan repayment, to recruit psychiatrists to rural and
underserved areas to provide community services.
EFFECTIVE DATE: The bill would become effective July 1, 2006.
A copy of the proposed legislation and fiscal memorandum begin on the next page
32
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 22 [ v. 9] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 9/ 2006 2: 09: 35 PM
Short Title: MH/ DD/ SA Community Capacity/ Financing Reform. ( Public)
Sponsors: ( By Request).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO APPROPRIATE FUNDS TO INCREASE INDEPENDENT AND
3 SUPPORTIVE LIVING APARTMENTS FOR PERSONS WITH MENTAL
4 ILLNESS, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE
5 ADDICTIONS, TO REVISE THE PSYCHIATRIC HOSPITAL FINANCING ACT,
6 TO CREATE INCENTIVES FOR PSYCHIATRISTS TO WORK IN
7 UNDERSERVED COMMUNITIES, AND TO APPROPRIATE FUNDS TO THE
8 MENTAL HEALTH TRUST FUND AS RECOMMENDED BY THE JOINT
9 LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
10 DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE SERVICES.
11 The General Assembly of North Carolina enacts:
12 PART I. HOUSING
13 SECTION 1. There is appropriated from the General Fund to the
14 Department of Health and Human Services the sum of twelve million fifty thousand
15 eight hundred thirty dollars ($ 12,050,830) for the 2006- 2007 fiscal year to be placed in
16 the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse
17 Services and Bridge Funding Needs. The Department shall work with the North
18 Carolina Housing Finance Agency to use the funds to provide an operating cost subsidy
19 for at least four hundred ( 400) independent and supportive living apartments for
20 individuals with mental illness, development disabilities, and substance abuse
21 addictions. The apartments shall be affordable to those with incomes at the
22 Supplemental Security Income ( SSI) level.
23 SECTION 2. There is appropriated from the General Fund to the North
24 Carolina Housing Finance Agency ( HFA) the sum of eleven million two hundred fifty
25 thousand dollars ($ 11,250,000) for the 2006- 2007 fiscal year to be placed in the North
26 Carolina Housing Trust Fund. The funds shall be used to finance the construction of at
27 least four hundred ( 400) independent and supportive living apartments for individuals
33
1 with mental illness, development disabilities, and substance abuse addictions. whose
2 incomes are at the Social Security level. The apartments shall be affordable to those
3 with incomes at the Supplemental Security Income ( SSI) level. If HFA is able to finance
4 the apartments for less than the amount appropriated under this Section, any remaining
5 funds as well as any interest earned on the amount appropriated may be used to finance
6 additional apartment, group homes, and transitional housing for individuals with mental
7 illness, development disabilities, and substance abuse addictions.
8 SECTION 3. There is appropriated from the General Fund to the
9 Department of Health and Human Services for the 2006- 2007 fiscal year the sum of
10 seven hundred thirteen thousand dollars ($ 713,000) for on- going operations support and
11 three hundred seventy thousand dollars ($ 370,000) for start- up expenses to be placed in
12 the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse
13 Services and Bridge Funding Needs to support 12 group home beds and 93 apartments
14 financed through the United States Department of Housing and Urban Development
15 PART II. MENTAL HEALTH TRUST FUND
16 SECTION 4. There is appropriated from the General Fund to the Trust Fund
17 for Mental Health, Developmental Disabilities, and Substance Abuse Services and
18 Bridge Funding Needs the sum of twenty million dollars ($ 20,000,000) for the
19 2006- 2007 fiscal year.
20 SECTION 5. Section 10.24.( b) of S. L. 2005- 276 reads as rewritten:
21 " SECTION 10.24.( b) The Department shall use not less than fifty percent
22 ( 50%) of moneys in the Trust Fund established pursuant to G. S. 143- 15D for the
23 2005- 2006 2006- 2007 fiscal year for nonrecurring start- up funds for community- based
24 services, including funding for existing area program services to transition to the private
25 sector or to another public service agency. Moneys in the Trust Fund may be used to
26 expand recurring community- based services only if sufficient recurring funds can be
27 identified within the Department from funds currently budgeted for mental health,
28 developmental disabilities, and substance abuse services, area mental health programs
29 or county programs, or local government."
30 PART III. PSYCHIATRIC HOSPITAL DEBT SERVICE
31 SECTION 6. G. S. 143- 15.3D( c) reads as rewritten:
32 "( c) Notwithstanding G. S. 143- 18, any nonrecurring savings in State
33 appropriations realized from the closure of any State psychiatric hospitals that are in
34 excess of the cost of operating and maintaining a new State psychiatric hospital shall not
35 revert to the General Fund but shall be placed in the Trust Fund and shall be used for the
36 purposes authorized in this section. Notwithstanding G. S. 143- 18, recurring savings
37 realized from the closure of any State psychiatric hospitals shall not revert to the
38 General Fund but shall be used for the payment of debt service on financing contract
39 indebtedness authorized pursuant to Article 9 of Chapter 142 of the General Statutes for
40 the construction of a new State psychiatric hospital. Any remainder not needed for this
41 debt service shall be credited to the Department of Health and Human Services to be
42 used only for the purposes of subsections ( b)( 2) and ( b)( 3) of this section."
43 SECTION 7. There is appropriated from the General Fund to the Reserve
44 for Debt Service the sum of six million two hundred six thousand six hundred eighty
34
1 dollars ($ 6,206,680) for the 2006- 2007 fiscal year. The funds shall be used to pay the
2 debt service incurred by the financing of the new psychiatric hospital to replace the
3 Dorothea Dix and John Umstead State psychiatric hospitals. It is the intend of the
4 General Assembly to use funds from the General Fund to pay the debt service on the
5 new psychiatric hospital. The Department of Health and Human Services shall redirect
6 any funds previously budgeted for debt service on the new psychiatric hospital to the
7 purposes authorized under G. S. 143- 15.3D( b)( 2) and ( b)( 3).
8 PART IV. RECRUITING AND RETAINING COMMUNITY PSYCHIATRISTS
9 SECTION 8. There is appropriated from the General Fund to the Board of
10 Governors of The University of North Carolina for the 2006- 2007 fiscal year the sum of
11 one million dollars ($ 1,000,000) to be allocated to the UNC- CH Area Health Education
12 Centers ( AHEC) program. AHEC shall use the funds to develop and implement a
13 program to recruit psychiatrists to rural and underserved areas to provide community
14 services. The program may include student loan repayment.
15 SECTION 9. This act becomes effective July 1, 2006. The Fiscal Research
16 Division shall track the allocation and utilization of the funds appropriated under this
17 act.
18
19
35
GENERAL ASSEMBLY OF NORTH CAROLINA
Session 2005
FISCAL ANALYSIS MEMORANDUM
[ This confidential fiscal memorandum is a fiscal analysis of a draft bill, amendment, committee
substitute, or conference committee report that has not been formally introduced or adopted on
the chamber floor or in committee. This is not an official fiscal note. If upon introduction of the
bill you determine that a formal fiscal note is needed, please make a fiscal note request to the
Fiscal Research Division, and one will be provided under the rules of the House and the Senate.]
DATE: May 9, 2006
TO: Representative Insko and Senator Nesbitt
FROM: Jennifer Hoffmann
Fiscal Research Division
RE: 2005- RCz- 22 [ v. 10]
FISCAL IMPACT
Yes ( X) No ( ) No Estimate Available ( )
FY 2006- 07 FY 2007- 08 FY 2008- 09 FY 2009- 10 FY 2010- 11
REVENUES:
EXPENDITURES:
General Fund ( GF)
DHHS
Trust Fund for
MH/ DD/ SA
Division of
MH/ DD/ SA
NCHFA
Housing Trust
Fund
Reserve for Debt
Service
University of NC
AHEC
GF TOTAL
32,050,830
1,083,000
11,250,000
6,206,680
1,000,000
__________
51,590,510
713,000
8,982,355
1,000,000
_________
10,695,355
713,000
8,980,433
1,000,000
_________
10,693,433
713,000
8,982,269
1,000,000
___________
_
10,695,269
713,000
8,980,401
1,000,000
____________
_
10,693,401
POSITIONS
( cumulative):
36
PRINCIPAL DEPARTMENT( S) & PROGRAM( S) AFFECTED: Department of Health
and Human Service, Division of Mental Health, Developmental Disabilities, and Substance
Abuse; NC Housing Finance Agency; UNC, Area Health Education Centers; Trust Fund
MH/ DD/ SA and Bridge Funding Needs; Reserve for Debt Service
EFFECTIVE DATE: July 1, 2006
BILL SUMMARY:
Section 1 appropriates $ 12,050,830 on a non- recurring basis from the General Fund to the Department
of Health and Human Services to be placed in the Trust Fund for Mental Health, Developmental
Disabilities and Substance Abuse Services and Bridge Funding Needs ( Trust Fund for MH/ SDD/ SA) to
provide an operating cost subsidy for independent and supportive living apartments.
Section 2 appropriates $ 11,250,000 on a non- recurring basis from the General Fund to the Housing
Finance Agency to be placed in the North Carolina Housing Trust Fund to finance the construction of
independent and supportive living apartments.
Section 3 appropriates from the General Fund to the Department of Health and Human Services,
Division of Mental Health, Developmental Disabilities and Substance Abuse the following: $ 713,000
for on- going operations support and $ 370,000 for start- up expenses to support 12 group home beds and
93 apartments financed through the United States Department of Housing and Urban Development.
Section 4 appropriates $ 20,000,000 on a non- recurring basis from the General Fund to the Trust Fund
for MH/ DD/ SA for the uses set out in the Trust Fund statute.
Section 6 rewrites a section of the Trust Fund for MH/ DD/ SA ( G. S. 143- 15.3D( c)) by deleting the
directive that the recurring savings realized from the closure of any State psychiatric hospital shall be
used to repay the debt service incurred for the construction of the new State psychiatric hospital.
Clarifies that the recurring savings shall be credited to the Department of Health and Human Services
for community- based services.
Section 7 appropriates $ 6,206,680 from the General Fund to the Reserve for Debt Service in FY 2006-
07 for the debt service associated with the construction of the new psychiatric hospital. States the intent
of the General Assembly to appropriate funds from the General Fund for the debt service until the debt
is fully paid. Also, directs the Department of Health and Human Service to move funds currently
budgeted for the debt service to community- based services.
Section 8 appropriates $ 1,000,000 on a recurring basis from the General Fund to the University of North
Carolina to be allocated to the Area Health Education Centers ( AHEC) to develop and implement a
program to recruit psychiatrists to rural and underserved areas to provide community services.
ASSUMPTIONS AND METHODOLOGY: The fiscal impact of the sections that contain a direct
appropriation is the amount of the appropriation ( see table on page 1). Sections 1, 2, 3 and 4 all contain
non- recurring appropriations that affect the 2006- 07 fiscal year only. Sections 3 and 8 contain recurring
appropriations that affect all future General Fund budgets unless the General Assembly takes action to
remove these items from the budget. Section 7 also contains a recurring appropriation for the
repayment of debt service associated with the construction of the new psychiatric hospital. The exact
amount of the annual debt service varies in accordance with the debt service schedule and shall continue
until the last debt service payment is made in 2027. The 2006 COPS issuance is scheduled for the fall
and debt service was calculated using a projected interest rate of 5.75%.
According to the Office of the State Treasurer, actual and estimated debt service costs for the new
psychiatric hospital follow on page 3:
37
Psychiatric Hospital Debt Service Schedule
Authorized
COPS
Issuance by
Year
57,207,490 48,961,672 106,169,162
State Fiscal
Year
2005 Issuance
Actual Debt
Service
Payments
2006 Issuance
Est'd Debt
Service
Payments
Total Debt
Service
Payments
2005 0 0 0
2006 3,782,471 0 3,782,471
2007 4,799,032 1,407,648 6,206,680
2008 4,799,586 4,182,769 8,982,355
2009 4,798,311 4,182,122 8,980,433
2010 4,799,708 4,182,561 8,982,269
2011 4,798,493 4,181,908 8,980,401
2012 4,800,543 4,182,737 8,983,280
2013 4,799,328 4,181,888 8,981,216
2014 4,799,252 4,182,860 8,982,112
2015 4,798,417 4,182,442 8,980,859
2016 4,799,556 4,182,224 8,981,780
2017 4,799,177 4,182,760 8,981,937
2018 4,800,012 4,182,695 8,982,707
2019 4,798,569 4,182,584 8,981,153
2020 4,799,101 4,182,927 8,982,028
2021 3,795,916 4,182,317 7,978,233
2022 3,644,079 4,182,182 7,826,261
2023 3,492,243 4,182,918 7,675,161
2024 3,340,406 4,182,080 7,522,486
2025 3,188,569 4,182,902 7,371,471
2026 0 4,182,832 4,182,832
2027 4,182,212 4,182,212
Total Debt
Service per
Issuance
88,432,770 85,057,568 169,707,868
SOURCES OF DATA: Office of State Treasurer
TECHNICAL CONSIDERATIONS: None
38
LEGISLATIVE PROPOSAL # 3
INCREASE MH/ DD/ SA CRISIS SERVICES
39
LEGISLATIVE PROPOSAL # 3:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO APPROPRIATE FUNDS FOR START- UP CRISIS
SERVICES, TO HIRE A CONSULTANT TO ASSIST AREA
AUTHORITIES DEVELOP AND IMPLEMENT CRISIS SERVICES, TO
INCREASE FUNDING TO PAY FOR CRISIS SERVICES, TO ENSURE
ACCESS TO CORE PSYCHIATRIC SERVICES, AND TO EXTEND THE
SUNSET ON THE FIRST COMMITMENT PILOT PROGRAM.
SHORT TITLE: Increase MH/ DD/ SA Crisis Services.
BRIEF OVERVIEW: This bill would:
1. Appropriate $ 10,500,000 ( non- recurring) to be used by LMEs to establish a
continuum of crisis facilities regionally and crisis services locally. It would also
appropriate $ 425,000 ( non- recurring) for the General Assembly to hire a consultant to assist
LMEs with developing and implementing start- up crisis services.
2. Appropriate $ 9,000,000 ( recurring) to create a fund to be used by LMEs to pay for
non- Medicaid reimbursable crisis ( core) services.
3. Appropriate $ 9,000,000 ( recurring) for LMEs to ensure access to core psychiatrist
services.
4. Extend the sunset for the First Commitment Pilot Program from July 1, 2006 to
October 1, 2007.
EFFECTIVE DATE: This bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
40
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 24 [ v. 6] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 9/ 2006 11: 55: 42 AM
Short Title: Increase MH/ DD/ SA Crisis Services. ( Public)
Sponsors: .
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO APPROPRIATE FUNDS FOR START- UP CRISIS SERVICES, TO
3 HIRE A CONSULTANT TO ASSIST AREA AUTHORITIES AND COUNTY
4 PROGRAMS DEVELOP AND IMPLEMENT A PLAN TO CREATE A
5 CONTINUUM OF CRISIS SERVICES, TO PAY FOR CRISIS SERVICES FOR
6 NON- MEDICAID ELIGIBLE INDIGENT INDIVIDUALS, TO ENSURE ACCESS
7 TO CORE PSYCHIATRIC SERVICES, AND TO EXTEND THE SUNSET FOR
8 THE FIRST COMMITMENT PILOT PROGRAM AS RECOMMENDED BY THE
9 JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
10 DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE SERVICES.
11 The General Assembly of North Carolina enacts:
12 SECTION 1.( a). There is appropriated from the General Fund to the
13 Department of Health and Human Services the sum of ten million five hundred
14 thousand dollars ($ 10,500,000) for the 2006- 2007 fiscal year. The funds shall be used
15 by area authorities and county programs to establish a continuum of regional crisis
16 facilities and local crisis services for persons with mental illness, developmental
17 disabilities, and substance abuse addictions.
18 There is appropriated from the General Fund to the General Assembly, Legislative
19 Services Commission, the sum of four hundred twenty- five thousand dollars ($ 425,000)
20 for the 2006- 2007 fiscal year to be used by the Joint Legislative Oversight Committee
21 on Mental Health, Developmental Disabilities, and Substance Abuse Services to hire
22 one or more consults to provide technical assistance to Local Management Entities
23 ( LMEs) to develop and implement crisis services plans under this Section. The
24 consultant shall assist area authorities and county programs and crisis regions to identify
25 local and regional gaps in crisis services, identify options for providing services,
26 implement new services, and maintain transparency and accountability for the use of
27 funds.
41
1 The area authorities and county programs will organize themselves into no more
2 than twenty- one ( 21) crisis regions based upon the existing Geriatric Specialty team
3 configurations or other approved regions. The funds shall be allocated to each area
4 authority or county programs on a per capita basis. The funds may be used for
5 operational start- up, capital, or subsidies related to developing a continuum of crisis
6 services. No more than three percent ( 3%) may be spent for administrative costs. The
7 area authorities and county programs within a crisis region shall work together to
8 identify gaps in their ability to provide a continuum of crisis services for all consumers
9 and use the funds appropriated to them to develop and implement a plan to address
10 those needs. At a minimum, the plan must address the development over time of the
11 following components: 24- hour crisis telephone lines, walk- in crisis services, mobile
12 crisis outreach, crisis respite/ residential services, crisis stabilization units, 23- hour beds,
13 facility- based crisis, in- patient crisis and transportation. Options for voluntary
14 admissions to a secured facility must include at least one service appropriate to address
15 the mental health, development disability, and substance abuse needs of adults and the
16 mental health, development disability, and substance abuse needs of children. Options
17 for involuntary commitment to a secured facility must include at least one option in
18 addition to admission to a State facility.
19 If all area authorities and county programs in a crisis region determine that a
20 facility- based crisis center is needed and sustainable on a long term basis, the crisis
21 region shall attempt to secure those services through a community hospital or other
22 community facility first. If all the area authorities and county programs in the crisis
23 region determine the region's crisis needs are being met, the area authorities and county
24 programs may use the funds to meet local crisis service needs.
25 Each area authority and county program and each crisis region will be required to
26 utilize the technical assistance of a consultant under contract with the General Assembly
27 to develop and implement its crisis services plan. The consultant shall assist area
28 authorities and county programs and crisis regions to identify local and regional gaps in
29 crisis services, identify options for providing services, implement new services, and
30 maintain transparency and accountability for the use of funds. The crisis region or area
31 authorities and county programs shall submit their crisis services plan to the consultant
32 and to the Division of Mental Health, Developmental Disabilities, and Substance Abuse
33 Services ( Division) for review and public comment. The crisis regions and area
34 authorities and county programs shall consider the comments prior to submitting a final
35 plan for implementation. Upon submission of a final plan to DHHS, each crisis region,
36 area authority and county program will receive implementation funds. Funds not
37 expended during the 2006- 2007 fiscal year shall not revert.
38 Area authorities and county programs and crisis regions must report monthly to the
39 consultant and to the Division regarding the use of the funds, whether there has been a
40 reduction in the use of State psychiatric hospitals for acute admissions, and remaining
41 gaps in local and regional crisis services. The consultant shall report regularly to the
42 General Assembly, the Fiscal Research Division, and the Joint Legislative Oversight
43 Committee on Mental Health, Developmental Disabilities and Substance Abuse
42
1 Services regarding each crisis region's and area authorities' and county programs'
2 proposed and actual use of the funds.
3 SECTION 1.( b). There is appropriated from the General Fund to the
4 Department of Health and Human Services the sum of nine million dollars ($ 9,000,000)
5 for the 2006- 2007 fiscal year. These funds shall be allocated to area authorities and
6 county programs on a per capita basis. Area authorities and county programs may bill
7 this fund to pay for mental health, developmental disabilities or substance abuse crisis
8 services provided to non- Medicaid eligible adults and children who are indigent and
9 have no other third- party payment source. Nothing in this section shall prohibit an area
10 authority or county program from using other funds to provide crisis services, nor shall
11 it limit an area authority or county program's obligation under G. S. 122C- 2( 2) to
12 provide emergency services.
13 SECTION 1.( c). There is appropriated from the General Fund to the
14 Department of Health and Human Services the sum of nine million dollars ($ 9,000,000)
15 for the 2006- 2007 fiscal year. These funds shall be allocated to area authorities and
16 county programs on a per capita basis. Area authorities and county programs may use
17 these funds to maintain public access to community psychiatric services. The funds
18 may be used on a unit cost reimbursement or non- unit cost reimbursement basis.
19 SECTION 2. S. L. 2003- 178 reads as rewritten.
20 " SECTION 1. The Secretary of Health and Human Services may, upon
21 request of a phase- one local management entity, waive temporarily the requirements of
22 G. S. 122C- 261 through G. S. 122C- 263 and G. S. 122C- 281 through G. S. 122C- 283
23 pertaining to initial ( first- level) examinations by a physician or eligible psychologist of
24 individuals meeting the criteria of G. S. 122C- 261( a) or G. S. 122C- 281( a), as applicable,
25 as follows:
26 ( 1) The Secretary has received a request from a phase- one local
27 management entity to substitute for a physician or eligible
28 psychologist, a licensed clinical social worker, a masters level
29 psychiatric nurse, or a masters level certified clinical addictions
30 specialist to conduct the initial ( first- level) examinations of individuals
31 meeting the criteria of G. S. 122C- 261( a) or G. S. 122C- 281( a). The
32 waiver shall be implemented on a pilot- program basis. The request
33 from the local management entity shall be submitted as part of the
34 entity's local business plan and shall specifically describe:
35 a. How the purpose of the statutory requirement would be better
36 served by waiving the requirement and substituting the
37 proposed change under the waiver.
38 b. How the waiver will enable the local management entity to
39 improve the delivery or management of mental health,
40 developmental disabilities, and substance abuse services.
41 c. How the services to be provided by the licensed clinical social
42 worker, the masters level psychiatric nurse, or the masters level
43 certified clinical addictions specialist under the waiver are
44 within each of these professional's scope of practice.
43
1 d. How the health, safety, and welfare of individuals will continue
2 to be at least as well protected under the waiver as under the
3 statutory requirement.
4 ( 2) The Secretary shall review the request and may approve it upon
5 finding that:
6 a. The request meets the requirements of this section.
7 b. The request furthers the purposes of State policy under G. S.
8 122C- 2 and mental health, developmental disabilities, and
9 substance abuse services reform.
10 c. The request improves the delivery of mental health,
11 developmental disabilities, and substance abuse services in the
12 counties affected by the waiver and also protects the health,
13 safety, and welfare of individuals receiving these services.
14 d. The duties and responsibilities performed by the licensed
15 clinical social worker, the masters level psychiatric nurse, or the
16 masters level certified clinical addictions specialist are within
17 the individual's scope of practice.
18 ( 3) The Secretary shall evaluate the effectiveness, quality, and efficiency
19 of mental health, developmental disabilities, and substance abuse
20 services and protection of health, safety, and welfare under the waiver.
21 The Secretary shall send a report on the evaluation to the Joint
22 Legislative Oversight Committee on Mental Health, Developmental
23 Disabilities, and Substances Abuse Services on or before July 1, 2006.
24 ( 4) The waiver granted by the Secretary under this section shall be in
25 effect for a period not to exceed three years, or the period for which
26 the requesting local management entity's business plan is approved,
27 whichever is shorter. until October 1, 2007.
28 ( 5) The Secretary may grant a waiver under this section to up to five local
29 management entities that have been designated as phase- one entities as
30 of July 1, 2003.
31 ( 6) In no event shall the substitution of a licensed clinical social worker,
32 masters level psychiatric nurse, or masters level certified clinical
33 addictions specialist under a waiver granted under this section be
34 construed as authorization to expand the scope of practice of the
35 licensed clinical social worker, the masters level psychiatric nurse, or
36 the masters level certified clinical addictions specialist.
37 ( 7) The Department shall assure that staff performing the duties are
38 trained and privileged to perform the functions identified in the waiver.
39 The Department shall involve stakeholders including, but not limited
40 to, the North Carolina Psychiatric Association, The North Carolina
41 Nurses Association, National Association of Social Workers, The
42 North Carolina Substance Abuse Professional Certification Board,
43 North Carolina Psychological Association, The North Carolina Society
44
1 for Clinical Social Work, and the North Carolina Medical Society in
2 developing required staff competencies.
3 ( 8) The local management entity shall assure that a physician is available
4 at all times to provide backup support to include telephone
5 consultation and face- to- face evaluation, if necessary.
6 SECTION 2. This act becomes effective July 1, 2003, and expires July 1,
7 2006. October 1, 2007."
8 SECTION 3. This act becomes effective July 1, 2006. The Fiscal Research
9 Division shall track the allocation and utilization of the funds appropriated under this
10 Act.
45
LEGISLATIVE PROPOSAL # 4
STRENGTHEN STATE MH/ DD/ SA REFORM
46
LEGISLATIVE PROPOSAL # 4:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO STRENGTHEN STATE LEADERSHIP FOR SYSTEM
REFORM OF MH/ DD/ SA SERVICES AND TO APPROPRIATE
FUNDS.
SHORT TITLE: Strengthen State MH/ DD/ SA Reform
BRIEF OVERVIEW: This bill would:
1. Direct DHHS to consolidate recent State Plans to produce a single document that
meets the requirements of G. S 122C- 102 and contains a cumulative statement of all still-applicable
provisions of those plans, identify those directives contained in the Plan and
other communications by the Division that must be adopted as an administrative rule in
order to be enforceable, and to undertake to adopt those rules.
2. Clarify that the State Plan is a strategic document intended to provide a course of
State and local action for a 3- year period of time, that contains specific goals for system
reform, designates benchmarks for reaching those goals and identifies data that can be
utilized to measure progress towards those goals, and is coordinated with the
implementation of crisis services by LMEs.
3. Clarify that the Secretary and the Division of MH/ DD/ SAS have a duty to provide
more technical assistance to LMEs.
4. Appropriate $ 1,700,000 to DHHS ( non- recurring) to hire one or more consultants to:
a. Assist with strategic planning.
b. Increase the capacity of DHHS to implement system reform.
c. Assist the Division to work with LMEs to:
1. Develop and implement 5- 10 critical performance indicators to be
used to hold LMEs accountable for managing the MH/ DD/ SA system.
2. Standardize the utilization management functions for non- Medicaid
services.
3. Develop LME expertise to undertake utilization management for
Medicaid services beginning July 1, 2007, but no later than July 1, 2009.
4. Develop standardized LME operating procedures.
47
5. Implement other LME management functions.
d. Provide technical assistance and oversight to providers and LMEs to ensure
that best practices and new services are being delivered with fidelity to the model.
5. Appropriate $ 300,000 to the DHHS to create three full- time positions for the creation of a
Local Management Strategic Assistance Team to assist LMEs develop, implement and
maintain their statutory responsibilities.
EFFECTIVE DATE: The bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
48
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 25 [ v. 7] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 11/ 2006 10: 39: 15 AM
Short Title: Strengthen State MH/ DD/ SA Reform. ( Public)
Sponsors: .
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO STRENGTHEN STATE LEADERSHIP FOR SYSTEM REFORM OF
3 MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE
4 ABUSE SERVICES AND TO APPROPRIATE FUNDS AS RECOMMENDED BY
5 THE JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL
6 HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
7 SERVICES.
8 The General Assembly of North Carolina enacts:
9 SECTION 1.( a). G. S. 122C- 102 reads as rewritten:
10 " § 122C- 102. State Plan for Mental Health, Developmental Disabilities, and
11 Substance Abuse Services. Services; system performance measures.
12 ( a) Purpose of State Plan. – The Department shall develop and implement a State
13 Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services. The
14 purpose of the State Plan is to provide a strategic template regarding how State and
15 local resources shall be organized and used to provide services. The State Plan shall be
16 issued every three- years beginning July 1, 2007. It shall identify specific goals to be
17 achieved by the Department, area authorities and county programs over a three year
18 period of time and benchmarks for determining whether progress is being made towards
19 those goals. It shall also identify data that will be used to measure progress towards the
20 specified goals. In order to increase the ability of the State, area authorities, county
21 programs, private providers and consumers to successfully implement the goals of the
22 State Plan, the Department shall not adopt or implement policies that are inconsistent
23 with the State Plan without first consulting with the Joint Legislative Committee on
24 Mental Health, Developmental Disabilities, and Substance Abuse Services.
25 ( b) Content of State Plan. – The State Plan shall include the following:
26 ( 1) Vision and mission of the State Mental Health, Developmental
27 Disabilities, and Substance Abuse Services system.
49
1 ( 2) Organizational structure of the Department and the divisions of the
2 Department responsible for managing and monitoring mental health,
3 developmental disabilities, and substance abuse services.
4 ( 3) Protection of client rights and consumer involvement in planning and
5 management of system services.
6 ( 4) Provision of services to targeted populations, including criteria for
7 identifying targeted populations.
8 ( 5) Compliance with federal mandates in establishing service priorities in
9 mental health, developmental disabilities, and substance abuse.
10 ( 6) Description of the core services that are available to all individuals in
11 order to improve consumer access to mental health, developmental
12 disabilities, and substance abuse services at the local level.
13 ( 7) Service standards for the mental health, developmental disabilities, and
14 substance abuse services system.
15 ( 8) Implementation of the uniform portal process.
16 ( 9) Strategies and schedules for implementing the service plan, including
17 consultation on Medicaid policy with area and county programs,
18 qualified providers, and others as designated by the Secretary,
19 intersystem collaboration, promotion of best practices, technical
20 assistance, outcome- based monitoring, and evaluation.
21 ( 10) A plan for coordination of the State Plan for Mental Health,
22 Developmental Disabilities, and Substance Abuse Services with the
23 Medicaid State Plan, and NC Health Choice.
24 ( 11) A business plan to demonstrate efficient and effective resource
25 management of the mental health, developmental disabilities, and
26 substance abuse services system, including strategies for
27 accountability for non- Medicaid and Medicaid services.
28 ( 12) Strategies and schedules for implementing a phased in plan to
29 eliminate disparities in the allocation of State funding across county
30 programs and area authorities by January 1, 2007, including methods
31 to identify service gaps and to ensure equitable use of State funds to
32 fill those gaps among all counties.
33 ( c) State performance measures. – The State Plan shall also include a mechanism
34 for measuring the State's progress towards increased performance on the following
35 matters: access to services, consumer- focused outcomes, individualized planning and
36 supports, promotion of best practices, quality management systems, system efficiency
37 and effectiveness, and prevention and early intervention. Beginning October 1, 2006,
38 and every six months thereafter, the Secretary shall report to the General Assembly and
39 the Joint Legislative Oversight Committee on Mental Health, Developmental
40 Disabilities and Substance Abuse Services on the State's progress in these performance
41 areas."
42 SECTION 1.( b). The North Carolina Department of Health and Human
43 Services ( DHHS) shall review all State Plans for Mental Health, Developmental
44 Disabilities, and Substance Abuse Services implemented after July 1, 2001 and before
50
1 the effective date of this act and produce a single document that contains a cumulative
2 statement of all still applicable provisions of those Plans. This cumulative document
3 shall constitute the State Plan until July 1, 2007.
4 DHHS and the Secretary shall also identify those provisions in
5 G. S. 122C- 112.1, prior State Plans, and directives or communications by the Division of
6 Mental Health, Developmental Disabilities, and Substance Abuse Services that must be
7 adopted as administrative rules in order to be enforceable and undertake to adopt those
8 rules.
9 SECTION 2. G. S. 122C- 112.1( a)( 9) reads as rewritten:
10 " § 122C- 112.1. Powers and duties of the Secretary.
11 ( a) The Secretary shall do all of the following:
12 . . .
13 ( 9) Assist Provide ongoing and focused technical assistance to area
14 authorities and county programs in the implementation of their
15 administrative and management functions and the establishment and
16 operation of community- based programs. The Secretary shall include
17 in the State Plan a mechanism for monitoring the Department's success
18 in implementing this duty and the progress of area authorities and
19 county programs in achieving these functions."
20 SECTION 3. There is appropriated from the General Fund to the
21 Department of Health and Human Services ( DHHS) the sum of one million seven
22 hundred thousand dollars ($ 1,7000,000) for the 2006- 2007 fiscal year to be used to hire
23 one or more independent consultants to undertake the following tasks:
24 a. Assist DHHS with the strategic planning necessary to develop the
25 revised State Plan as required under G. S. 122C- 102. The State Plan
26 shall be coordinated with local and regional crisis service plans by area
27 authorities and county programs.
28 b. Study and make recommendations to increase the capacity of DHHS to
29 implement system reform successfully and in a manner that maintains
30 strong management functions by area authorities and county programs
31 at the local level.
32 c. Assist the Division of Mental Health, Developmental Disabilities , and
33 Substance Abuse Services to work with area authorities and county
34 programs to:
35 1. Develop and implement five to ten critical performance
36 indicators to be used to hold area authorities and county
37 programs accountable for managing the mental health,
38 developmental disabilities, and substance abuse services
39 system. The performance system indicators shall be
40 implemented no later than six months after the consultant's
41 contract is awarded and in no event later than July 1, 2007.
42 2. Standardize the utilization management functions for Medicaid
43 and non- Medicaid services and for the review and approval of
44 person- centered plans.
51
1 3. Develop area authorities' and county programs' expertise to
2 assume utilization management for Medicaid services. The
3 goal shall be to have a portion of the area authorities and county
4 programs assume that function beginning July 1, 2007 and the
5 remainder to assume the function no later than July 1, 2009.
6 4. Develop a standardized operating procedure for area authorities
7 and county programs.
8 5. Implement other uniform procedures for the management
9 functions of area authorities and county programs.
10 d. Provide technical assistance and oversight to private service providers,
11 area authorities, and county programs to ensure that best practices and
12 new services are being delivered with fidelity to the service definition
13 model.
14 SECTION 4. There is appropriated from the General Fund to the
15 Department of Health and Human Services, Division of Mental Health, Developmental
16 Disabilities, and Substance Abuse Services, the sum of three hundred thousand dollars
17 ($ 300,000) for the 2006- 2007 fiscal year to be used for three full time positions to create
18 a Local Management Entity Strategic Assistance Team ( Team). The Team shall assist
19 local management entities develop, implement, and maintain their statutory
20 responsibilities.
21 SECTION 5. This act becomes effective July 1, 2006.
22
52
LEGISLATIVE PROPOSAL # 5
STRENGTHEN LOCAL MANAGEMENT ENTITIES
( LMES)
53
LEGISLATIVE PROPOSAL # 5:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO CLARIFY AND STRENGTHEN THE ROLE OF LOCAL
MANAGEMENT ENTITIES.
SHORT TITLE: Strengthen Local Management Entities ( LMEs).
BRIEF OVERVIEW This bill would:
1. Amend Article 4 of Chapter 122C to clearly articulate the administrative and
managerial functions that are the responsibility of an LME and clarify that LME functions
may not be removed by the Secretary absent an individualized finding that a particular
program is not providing minimally adequate services or is in imminent danger of failing
financially.
2. Direct the Division to recalculate the LME systems management allocations for SFY
2006- 2007 to include funds for each LME to implement 24/ 7/ 365 screening, triage and
referral and the review and approval of all person- centered plans.
3 Direct the Department to retain all funds withdrawn from the LME cost model
allocations that are not accounted for in subsection 5.2 of this section and transfer the funds
to LMEs to use for services.
4. Amend Article 4 of Chapter 122C to comply with the current Division practice to
require that by July 1, 2007, all LMEs must have catchment areas that include at least 6
counties or a population of at least 200,000. LMEs that do not comply with this
requirement will lose 10% of their administrative funding each year until mergers have
been accomplished. Administrative savings realized under this provision shall be
reallocated to those LMEs for services.
5. Direct the Office of State Personnel to study the job functions of area directors and
finance officers and implement job classifications by December 1, 2006, that reflect the
necessary skills for those positions. These new requirements would apply to persons hired
on or after January 1, 2007.
54
6. Standardize area board membership to 3- year terms and prohibit individuals from
serving more than 2 consecutive terms. Amend LME board member requirements to
increase participation by individuals with business and financial backgrounds and to create
more flexibility as to the appointment of consumer members.
7. Amend Chapters 122C and 160A to require that the quarterly financial reports filed
by LMEs with their counties must be reviewed and commented on by the county finance
officers.
8. Amend a number of statutes to clarify that counties may create provide services to
an LME under their general powers.
EFFECTIVE DATE: The merger requirements for LMEs would become effective
July 1, 2007. The job classifications for LME director and finance officer would
become effective January 1, 2007 and apply to persons hired on or after that date.
The remainder of the bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
55
1
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 18 [ v. 12] ( 03/ 09)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 12/ 2006 9: 19: 49 AM
Short Title: Strengthen Local Management Entities ( LMEs). ( Public)
Sponsors: .
Referred to:
2 A BILL TO BE ENTITLED
3 AN ACT TO CLARIFY AND STRENGTHEN THE ROLE OF LOCAL
4 MANAGEMENT ENTITIES AS RECOMMENDED BY THE JOINT
5 LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
6 DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE SERVICES.
7 The General Assembly of North Carolina enacts:
8 SECTION 1. G. S. 122C- 3 is amended by adding a new subdivision to read:
9 " § 122C- 3. Definitions.
10 As used in this Chapter, unless another meaning is specified or the context clearly
11 requires otherwise, the following terms have the meanings specified: The following
12 definitions apply in this Chapter:
13 . . .
14 ( 20b) " Local management entity" or " LME" means an area authority, county
15 program or consolidated human services agency. An LME is not a
16 unit of local government and the term refers to functional
17 responsibilities rather than governance structure."
18 SECTION 2. G. S. 122C- 111 reads as rewritten:
19 " § 122C- 111. Administration.
20 The Secretary shall administer and enforce the provisions of this Chapter and the
21 rules of the Commission and shall operate State facilities. An area director or program
22 director shall ( i) manage the public mental health, developmental disabilities and
23 substance abuse system for administer the programs of the area authority or county
24 program, as applicable, program according to the local business plan, and ( ii) enforce
25 applicable State laws, rules of the Commission, and rules of the Secretary. The
26 Secretary in cooperation with area and county program directors and State facility
27 directors shall provide for the coordination of public services between area authorities,
56
1 county programs, and State facilities. The area authority or county program shall
2 monitor the provision of mental health, developmental disability, and substance abuse
3 services for compliance with the law, which monitoring shall not supercede or duplicate
4 the regulatory authority or functions of agencies of the Department."
5 SECTION 3. G. S. 122C- 115.2( a) reads as rewritten:
6 " § 122C- 115.2. Business LME business plan required; content, process, certification.
7 ( a) Every county, through an area authority or county program, shall provide for
8 the development, review, and approval of a an LME business plan for the management
9 and delivery of mental health, developmental disabilities, and substance abuse services.
10 A An LME business plan shall provide detailed information on how the area authority
11 or county program will meet State standards, laws, and rules for ensuring quality mental
12 health, developmental disabilities, and substance abuse services, including outcome
13 measures for evaluating program effectiveness. The business plan shall be in effect for
14 at least three State fiscal years."
15 SECTION 4. Article 4 of Chapter 122C is amended by adding a new section
16 to read:
17 " § 122C- 115.4. Responsibilities of local management entities.
18 ( a) Local management entities are responsible for the administration and
19 management of the public system of mental health, developmental disabilities, and
20 substance abuse services at the community level. An LME plans, develops, implements
21 and monitors services within a specified geographic area for both insured and uninsured
22 individuals.
23 ( b) The core functions of an LME include all of the following:
24 ( 1) Access for all citizens to core services through the implementation of a
25 24- hour a day, seven- day a week screening, triage, and referral process and a uniform portal of
26 entry into care.
27 ( 2) Provider endorsement, monitoring, technical assistance, and capacity
28 development. An LME may remove as a choice a provider who fails to meet defined quality
29 criteria or fails to provide data required for monitoring client outcomes.
30 ( 3) Utilization review and determination of the appropriate level and
31 intensity of services for all State- funded services, authorization of
32 recipients of services under a Medicaid waiver, review and approval of
33 all person- centered plans, utilization management for all services, care
34 coordination, quality management, and authorization of State
35 psychiatric hospital and other State facility bed days.
36 ( 4) Community collaboration and consumer affairs including assurance of
37 rights, appeals, establishment and support for an effective consumer
38 and family advisory committee.
39 ( 5) Financial management and accountability including information
40 management for the delivery of publicly funded services for mental
41 illness, developmental disabilities, and substance abuse.
42 ( c) An area authority, county program may contract with any public or private
43 entity for the implementation of some or all of the LME responsibilities articulated
44 under this section. A consolidated human services agency may contract with any public
57
1 or private entity for the implementation of some or all of the LME responsibilities
2 subject to the requirements of G. S. 122C- 127. The Secretary may not remove any
3 responsibility enumerated under subsection ( b) of this section absent an individualized
4 finding that a particular area authority or county program is not providing minimally
5 adequate services under G. S. 122C- 124.1 or is in imminent danger of failing financially
6 under G. S. 122C- 125. The notice and procedural requirements of G. S. 122C- 124.1 and
7 122C- 125 shall apply to the findings."
8 SECTION 5. Effective July 1, 2009. G. S. 122C- 115.4( b) as enacted in
9 Section 4 of this act reads as rewritten:
10 "( b) The core functions of an LME include all of the following:
11 ( 1) Access for all citizens to core services through the implementation of a
12 24- hour a day, seven- days a week screening, triage, and referral
13 process and a uniform portal of entry into care.
14 ( 2) Provider endorsement, monitoring, technical assistance, and capacity
15 development. An LME may remove as a choice a provider who fails
16 to meet defined quality criteria or fails to provide data required for
17 monitoring client outcomes.
18 ( 3) Utilization review and determination of the appropriate level and
19 intensity of services for all state funded services, authorization of
20 recipients of services under a Medicaid waiver, review and approval of
21 all person- centered plans, utilization management for all services, care
22 coordination, quality management, and authorization of State
23 psychiatric hospital and other State facility bed days.
24 ( 4) Community collaboration and consumer affairs including assurance of
25 rights, appeals, establishment and support for an effective consumer
26 and family advisory committee.
27 ( 5) Financial management and accountability including information
28 management for the delivery of publicly funded services for mental
29 illness, developmental disabilities, and substance abuse."
30 SECTION 6. G. S. 122C- 118.1 reads as rewritten:
31 " § 122C- 118.1. Structure of area board.
32 ( a) An area board shall have no fewer than 11 and no more than 25 members. In
33 a single- county area authority, the members shall be appointed by the board of county
34 commissioners. Except as otherwise provided, in areas consisting of more than one
35 county, each board of county commissioners within the area shall appoint one
36 commissioner as a member of the area board. These members shall appoint the other
37 members. The boards of county commissioners within the multicounty area shall have
38 the option to appoint the members of the area board in a manner other than as required
39 under this section by adopting a resolution to that effect. The boards of county
40 commissioners in a multicounty area authority shall indicate in the business plan each
41 board's method of appointment of the area board members in accordance with G. S.
42 122C- 115.2( b). These appointments shall take into account sufficient citizen
43 participation, equitable representation of the disability groups, and equitable
44 representation of participating counties. Individuals appointed to the board shall include
58
1 an individual with financial expertise or expertise, a county finance officer, an
2 individual with expertise in management or business, and an individual representing the
3 interests of children. A member of the board may be removed with or without cause by
4 the initial appointing authority. Vacancies on the board shall be filled by the initial
5 appointing authority before the end of the term of the vacated seat or within 90 days of
6 the vacancy, whichever occurs first, and the appointments shall be for the remainder of
7 the unexpired term.
8 ( b) At least Not more than fifty percent ( 50%) of the members of the area board
9 shall represent the following:
10 ( 1) A physician licensed under Chapter 90 of the General Statutes to
11 practice medicine in North Carolina who, when possible, is certified as
12 having completed a residency in psychiatry.
13 ( 2) A clinical professional from the fields of mental health, developmental
14 disabilities, or substance abuse.
15 ( 3) A At least one family member or an individual from a citizens'
16 organizations organization composed primarily of consumers or their
17 family members, representing the interests of individuals:
18 a. With mental illness; and
19 b. In recovery from addiction; and or
20 c. With developmental disabilities.
21 ( 4) Openly At least one openly declared consumers: consumer:
22 a. With mental illness; and
23 b. With developmental disabilities; and disabilities; or
24 c. In recovery from addiction.
25 ( c) The board of county commissioners may elect to appoint a member of the
26 area authority board to fill concurrently more than one category of membership if the
27 member has the qualifications or attributes of more than one category of membership.
28 ( d) Any member of an area board who is a county commissioner serves on the
29 board in an ex officio capacity. The terms of county commissioners on an area board are
30 concurrent with their terms as county commissioners. The terms of the other members
31 on the area board shall be for four three years, except that upon the initial formation of
32 an area board one- fourth one- third shall be appointed for one year, one- fourth one- third
33 for two years, one- fourth for three years, and all remaining members for four three
34 years. Members other than county commissioners shall not be appointed for more than
35 two consecutive terms. Board members serving as of July 1, 2006 may remain on the
36 board for one additional term.
37 ( e) Upon request, the board shall provide information pertaining to the
38 membership of the board that is a public record under Chapter 132 of the General
39 Statutes."
40 SECTION 7. G. S. 122C- 115.1( g) reads as rewritten:
41 "( g) In a single- county program, an advisory committee shall be appointed by the
42 board of county commissioners and shall report to the county manager. The
43 appointments shall take into account sufficient citizen participation, equitable
44 representation of the disability groups, and equitable representation of participating
59
1 counties. At least fifty percent ( 50%) of the The membership shall conform to the
2 requirements in G. S. 122C- 118.1( b)( 1)-( 4). G. S. 122C- 118.1. In a multicounty
3 program, the advisory committee shall be appointed in accordance with the terms of the
4 interlocal agreement."
5 SECTION 8. G. S. 122C- 115.1( a) reads as rewritten:
6 " § 122C- 115.1. County governance and operation of mental health, developmental
7 disabilities, and substance abuse services program.
8 ( a) A county may operate a county program for mental health, developmental
9 disabilities, and substance abuse services as a single county or, pursuant to Article 20 of
10 Chapter 160A of the General Statutes, may enter into an interlocal agreement with one
11 or more other counties for the operation of a multicounty program. An interlocal
12 agreement shall provide for the following:
13 ( 1) Adoption and administration of the program budget in accordance with
14 Chapter 159 of the General Statutes.
15 ( 2) Appointment of a program director to carry out the provisions of G. S.
16 122C- 111 and duties and responsibilities delegated by the county.
17 Except when specifically waived by the Secretary, the program
18 director shall meet the following minimum qualifications:
19 a. Masters degree,
20 b. Related experience, and
21 c. Management experience.
22 ( 3) A targeted minimum population of 200,000 or a targeted minimum
23 number of five counties served by the program.
24 ( 4) Compliance with the provisions of this Chapter and the rules of the
25 Commission and the Secretary.
26 ( 5) Written notification to the Secretary prior to the termination of the
27 interlocal agreement.
28 ( 6) Appointment of an advisory committee. The interlocal agreement shall
29 designate a county manager to whom the advisory committee shall
30 report. The interlocal agreement shall also designate the appointing
31 authorities. The appointing authorities shall make appointments that
32 take into account sufficient citizen participation, equitable
33 representation of the disability groups, and equitable representation of
34 participating counties. At least fifty percent ( 50%) of the membership
35 shall conform to the requirements provided in G. S.
36 122C- 118.1( b)( 1)-( 4). G. S. 122C- 188.1."
37 SECTION 9. Effective January 1, 2007, G. S. 122C- 115.1( a), as amended by
38 Section 8 of this act reads as rewritten:
39 " § 122C- 115.1. County governance and operation of mental health, developmental
40 disabilities, and substance abuse services program.
41 ( a) A county may operate a county program for mental health, developmental
42 disabilities, and substance abuse services as a single county or, pursuant to Article 20 of
43 Chapter 160A of the General Statutes, may enter into an interlocal agreement with one
60
1 or more other counties for the operation of a multicounty program. An interlocal
2 agreement shall provide for the following:
3 ( 1) Adoption and administration of the program budget in accordance with
4 Chapter 159 of the General Statutes.
5 ( 2) Appointment of a program director to carry out the provisions of
6 G. S. 122C- 111 and duties and responsibilities delegated by the county.
7 Except when specifically waived by the Secretary, the program
8 director shall meet all the following minimum qualifications:
9 a. Masters degree, degree.
10 b. Related experience, and related experience.
11 c. Management experience.
12 d. Any other qualifications required under the job classification
13 adopted by the State Personnel Commission.
14 ( 3) A targeted minimum population of 200,000 or a targeted minimum
15 number of five counties served by the program.
16 ( 4) Compliance with the provisions of this Chapter and the rules of the
17 Commission and the Secretary.
18 ( 5) Written notification to the Secretary prior to the termination of the
19 interlocal agreement.
20 ( 6) Appointment of an advisory committee. The interlocal agreement shall
21 designate a county manager to whom the advisory committee shall
22 report. The interlocal

JOINT LEGISLATIVE OVERSIGHT COMMITTEE
ON
MENTAL HEALTH, DEVELOPMENTAL DISABILITIES,
AND SUBSTANCE ABUSE SERVICES
REPORT TO THE 2006 REGULAR SESSION
OF THE
2005 GENERAL ASSEMBLY
A LIMITED NUMBER OF COPIES OF THIS REPORT IS AVAILABLE
FOR DISTRIBUTION THROUGH THE LEGISLATIVE LIBRARY
ROOMS 2126, 2226
STATE LEGISLATIVE BUILDING
RALEIGH, NORTH CAROLINA 27611
TELEPHONE: ( 919) 733- 7778
OR
ROOM 500
LEGISLATIVE OFFICE BUILDING
RALEIGH, NORTH CAROLINA 27603- 5925
TELEPHONE: ( 919) 733- 9390
THE REPORT IS ALSO AVAILABLE ON- LINE:
http:// www. ncleg. net/ LegLibrary/
TABLE OF CONTENTS
Letter of Transmittal ....................................................................................................................... i
Joint Legislative Oversight Committee on Mental Health
Developmental Disabilities and Substance Abuse Services Membership.............................. ii
Preface........................................................................................................................ ...................... 1
Committee Proceedings ................................................................................................................. 2
Committee Findings and Legislative Proposals......................................................................... 12
1. AN ACT TO INCREASE STATE FUNDING AND FLEXIBILITY FOR MENTAL
HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
SERVICES 26
2. AN ACT TO APPROPRIATE FUNDS TO INCREASE INDEPENDENT
AND SUPPORTIVE LIVING APARTMENTS FOR PERSONS WITH
MENTAL ILLNESS, DEVELOPMENTAL DISABILITIES, AND
SUBSTANCE ABUSE ADDICTIONS, TO REVISE THE PSYCHIATRIC
HOSPITAL FINANCING ACT, TO CREATE INCENTIVES FOR
PSYCHIATRISTS TO WORK IN UNDERSERVED COMMUNITIES,
AND TO APPROPRIATE FUNDS TO THE MENTAL HEALTH TRUST
FUND. 30
3. AN ACT TO APPROPRIATE FUNDS FOR START- UP CRISIS
SERVICES, TO HIRE A CONSULTANT TO ASSIST AREA
AUTHORITIES AND COUNTY PROGRAMS DEVELOP AND
IMPLEMENT A PLAN TO CREATE A CONTINUUM OF CRISIS
SERVICES, TO PAY FOR CRISIS SERVICES FOR NON- MEDICAID
ELIGIBLE INDIGENT INDIVIDUALS, TO ENSURE ACCESS TO CORE
PSYCHIATRIC SERVICES, AND TO EXTEND THE SUNSET FOR THE
FIRST COMMITMENT PILOT PROGRAM. 38
4. AN ACT TO STRENGTHEN STATE LEADERSHIP FOR SYSTEM
REFORM OF MENTAL HEALTH, DEVELOPMENTAL DISABILITIES,
AND SUBSTANCE ABUSE SERVICES AND TO APPROPRIATE
FUNDS. 45
5. AN ACT TO CLARIFY AND STRENGTHEN THE ROLE OF LOCAL
MANAGEMENT ENTITIES. 52
6. AN ACT TO CODIFY PORTIONS OF THE STATE PLAN FOR MENTAL
HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE
ABUSE SERVICES TO CREATE CONSUMER AND FAMILY
ADVISORY COMMITTEES, AND TO APPROPRIATE FUNDS TO
IMPLEMENT THE MH/ DD/ SA CONSUMER ADVOCACY PROGRAM. 68
7. AN ACT TO ASSIST PRIVATE PROVIDERS DELIVERY MENTAL
HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE
ABUSE SERVICES. 74
8. AN ACT TO STRENGTHEN THE OVERSIGHT ROLE OF THE JOINT
LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
SERVICES; TO REPEAL THE LEGISLATIVE STUDY COMMISSION
ON MENTAL HEALTH, DEVELOPMENTAL DISABILITIES AND
SUBSTANCE ABUSE SERVICES; TO DIRECT THE OVERSIGHT
COMMITTEE TO STUDY CERTAIN ISSUES; AND TO MAKE A
RECOMMENDATION REGARDING INCREASING HEALTH CARE
COVERAGE TO INCLUDE MENTAL HEALTH AND SUBSTANCE
ABUSE SERVICES. 79
Appendices
A. Authorizing Legislation, Article 12L of Chapter 120 of the General Statutes.................. 83
B. Spreadsheet with spending recommendations. ................................................................... 86
C. Revised State Service Dollars Per Capita Allocations.......................................................... 88
JOINT LEGISLATIVE COMMITTEE ON MENTAL HEALTH, DEVELOPMENTAL DISABILITIES,
AND SUBSTANCE ABUSE SERVICES
State Legislative Building
Raleigh, North Carolina 27603
Senator Martin Nesbitt, Co- Chair Representative Verla Insko Co- Chair
May 10, 2006
TO THE MEMBERS OF THE 2005 GENERAL ASSEMBLY ( 2006 Regular Session):
The Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities
and Substance Abuse Services submits to you for your consideration its report pursuant
to G. S. 120- 231.
Respectfully Submitted,
_______________________________
Rep. Verla Insko, Co- Chair
_______________________________
Sen. Martin Nesbitt, Co- Chair
i
ii
JOINT LEGISLATIVE OVERSIGHT COMMITTEE
ON MENTAL HEALTH, DEVELOPMENTAL DISABILITIES
AND SUBSTANCE ABUSE SERVICES
MEMBERSHIP LIST
2005- 2006
Senator Martin Nesbitt – Co- Chair
300- B Legislative Office Building
Raleigh, NC 27603
O: 715- 3001 Email: Martinn@ ncleg. net
Representative Verla Insko – Co- Chair
2121 Legislative Building
Raleigh, NC 27601
O: 733- 7208 Email: verlai@ ncleg. net
Senator Austin Allran
516 Legislative Office Building
Raleigh, NC 27603
O: 733- 5876 Email: Austina@ ncleg. net
Representative Martha Alexander
2208 Legislative Building
Raleigh, NC 27601
O: 733- 5807 Email: Marthaa@ ncleg. net
Senator Janet Cowell
1028 Legislative Building
Raleigh, NC 27601
O: 715- 6400 Email: Janetc@ ncleg. net
Representative Jeffrey Barnhart
608 Legislative Office Building
Raleigh, NC 27601
O: 715- 2009 Email: Jeffreyba@ ncmail. net
Senator Charlie Dannelly
2010 Legislative Building
Raleigh, NC 27601
O: 733- 5955 Email: Charlied@ ncleg. net
Representative Beverly Earle
634 Legislative Office Building
Raleigh, NC 27603
O: 715- 2530 Email: Beverlye@ ncleg. net
Senator James Forrester
1129 Legislative Building
Raleigh, NC 27601
O: 715- 3050 Email: Jamesf@ ncleg. net
Representative Bob England
2219 Legislative Building
Raleigh, NC 27601
O: 733- 5749 Email: Bobe@ ncmail. net
Senator Jeanne Lucas
300- G Legislative Office Building
Raleigh, NC 27603
O: 733- 4599 Email: Jeannel@ ncleg. net
Rep. Jean Farmer- Butterfield - Adv. Member
611 Legislative Office Building
Raleigh, NC 27603
O: 733- 5898 Email: Jeanf@ ncleg. net
Senator Vernon Malone
2113 Legislative Building
Raleigh, NC 27601
O: 733- 5880 Email: Vernonm@ ncleg. net
Representative Carolyn Justice
301C Legislative Office Building
Raleigh, NC 27603
O: 715- 9664 Email: Carolynju@ ncleg. net
Senator William Purcell
625 Legislative Office Building
Raleigh, NC 27603
O: 733- 5953 Email: Williamp@ ncleg. net
Representative Edd Nye
639 Legislative Office Building
Raleigh, NC 27603
O: 733- 5477 Email: Eddn@ ncleg. net
Senator Larry Shaw – Advisory Member
621 Legislative Office Building
Raleigh, NC 27603
O: 733- 9349 Email: Larrys@ ncleg. net
Rep. Earline Parmon – Adivsory Member
632 Legislative Office Building
Raleigh, NC 27603
O: 733- 5829 Email: Earlinep@ ncleg. net
Representative Fred Steen
514 Legislative Office Building
Raleigh, NC 27603
O: 733- 5881 Email: Fredst@ ncmail. net
iii
STAFF TO LOC
Kory Goldsmith, Research Division
O: 733- 2578
Email: koryg@ ncleg. net
Shawn Parker, Research Division
O: 733- 2578
Email: shawnp@ ncleg. net
Rennie Hobby, Committee Assistant
O: 733- 5639
Email: mentalhealthca@ ncleg. net
Ben Popkin, Research Division
O: 733- 2578
Email: benp@ ncleg. net
Jennifer Hoffman, Fiscal Research
O: 733- 4910
Email: Jenniferh@ ncleg. net
Andrea Russo, Fiscal Research
O: 733- 4910
Email: Andrear@ ncleg. net
Lisa Hollowell, Fiscal Research
O: 733- 4910
Email: lisah@ ncleg. net
1
PREFACE
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities, and Substance Abuse Services ( LOC) is established in Article 27 of Chapter
120 of the General Statutes. The LOC was charged with examining, on a continual basis, the
system- wide issues affecting the development, financing, administration, and delivery of mental
health, developmental disabilities, and substance abuse services, including issues related to
governance, accountability and quality of services. The Committee consists of sixteen
members, eight appointed by the President Pro Tempore of the Senate and eight
appointed by the Speaker of the House of Representatives. The members appointed by
the President Pro Tempore must include all of the following: at least two must be
members of the Senate Committee on Appropriations, the Chair of the Senate
Appropriations Committee on Human Resources and at least two must be of the
minority party. The members appointed by the Speaker of the House must include all
of the following: at least two members of the House Committee on Appropriations, the
Co- Chairs of the House of Representatives Appropriations Subcommittee on Health
and Human Services, and at least two members of the minority party. The Co- Chairs
for 2005- 2006 are Senator Martin Nesbitt and Representative Verla Insko.
2
COMMITTEE PROCEEDINGS
LEGISLATIVE OVERSIGHT COMMITTEE PROCEEDINGS
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services met on nine occasions during the 2006
interim. The following is a brief summary of the ( LOC) Committee’s proceedings.
Detailed minutes and information from each Committee meeting is available in the
Legislative Library and on the Oversight Committee webpage at
http:// www. ncleg. net/.
September 21, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services convened its first meeting of the interim on
Wednesday, September 21, 2005, at 10: 00 A. M. in Room 643 of the Legislative Office
Building.
Kory Goldsmith, Research Division and Lisa Hollowell, Fiscal Research Division,
presented an overview of the historical context and current goals of mental health
reform in North Carolina as enacted by House Bill 381 - the Mental Health System
Reform Bill.
Ms. Goldsmith identified the role of the local management entities ( LME) in
managing services. Ms. Hollowell explained the purpose and uses of the Trust Fund for
Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge
Funding, and gave the total appropriations since FY 2000- 2001 with adjustments and
expenditures.
Regarding the downsizing of state institutions, Ms. Hollowell said that the idea
was to shift funding from state institutions into the community as downsizing occurred.
She then reviewed a chart showing a total of 414 beds in the State's psychiatric hospitals
closed to date, and 33 Area Programs/ LMEs in place as of July 1, 2005, down from 40
Area Programs in 2001.
Leza Wainwright, Deputy Director of the Division on Mental Health,
Developmental Disabilities and Substance Abuse Services ( DMH), then gave an update
on activities relating to mental health reform efforts since the last committee meeting on
January 18, 2005, and reviewed the Mental Health Trust Fund expenditures for the year.
Representative Insko, Co- Chair, asked the following stakeholders to provide the
Committee with their comments: Consumer and family members – Betty Stansberry,
DD; Louise Fisher, MH and Jeff McLoud, MH; LMEs – Grayce Crockett, Mecklenburg;
Joy Futrell, Rowan/ Chowan and Tom McDevitt, Smokey Mountain; County
3
Commissioners Association – Patrice Roesler; Advocates – John Tote, MH Association
of N. C.; Dave Richard, ARC of N. C.; Providers – Sarah Wiltgen, Brynn Marr Behavioral
Healthcare; Trish Hussy, Freedom House; Jill Keel, Autism Society of N. C.; Robin
Huffman, N. C. Psychological Association; Suzie Kennedy, Life Enrichment Center of
Cleveland County; and Toni Camp, RN, Life Enrichment Center of Cleveland County;
Dan Herr, CFAC.
October 19, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its second meeting on Wednesday,
October 19, 2005, at 9: 00 A. M. at the Renaissance Hotel in Asheville, North Carolina.
Senator Martin Nesbitt, Co- Chair, introduced Larry Thompson and Beth
Melcher, consultants hired on a part- time basis to give the LOC their administrative and
clinical perspectives on the State MH/ DD/ SAS system and the current reform efforts.
Lisa Hollowell, Fiscal Research Division, addressed questions from the
September 21st meeting and reviewed ways the Mental Health Trust Fund may be used
in the reform effort.
Shawn Parker, Research Analyst, gave a synthesis of public comments from the
September 21st meeting, identifying areas of progress, areas of concern, and
recommendations of stakeholders.
Representative Insko, Co- Chair, reviewed a proposal for LOC work priorities
during the interim, noting that two major areas of concern were the capacity and
resources at the LME and Division levels to manage the system and the capacity to
deliver services.
Kory Goldsmith, Research Division, gave an overview of the LME role regarding
management and utilization review. G. S. 122C- 141( a), changes the role of area
programs from one of service providers to managers of services. G. S. 122C- 115.2( b)( 1),
provides the structure of the LME business plan, which governs how LMEs implement
their management roles.
David Swann, Director of Crossroads Behavioral Healthcare serving Iredell,
Surry, and Yadkin Counties, gave an LME perspective on reform by reviewing the nine
key functions of Crossroads' operational activities. He also described how access,
screening, triage and referral ( STR) and the utilization review ( UR) and service
management functions are provided at Crossroads.
Allyn Guffey, Acting Assistant Secretary for Finance and Business Operations for
( DHHS), addressed the Secretary’s proposal to centralize UR and STR functions and
reduce funding for the Department of Health and Human Services LME functions. He
gave a brief background of the system before reform explaining that the formula
developed to project the cost of the LME functions was based on 20 LMEs.
Senator Nesbitt then asked for public comments. The following members of the
public addressed the LOC: Jerry Rice, Mona and David Cornwell, Will Callison, Jere
Annis, Emma Thorne, Billie Gilfillan, Chris Melton, Dennis Huntley, Howard Graves,
4
Paula Cox, Sharon Thomas, Laurie Coker, Patricia McGivens, Nancy Baker, Julie
Millain, and Cherie Novak. The speakers expressed their needs and concerns as
MH/ DD/ SAS consumers and family members regarding reform.
Leza Wainwright, Deputy Director, DMH, then gave a report on the Mental
Health Trust Fund, showing anticipated expenditures of $ 24.7 million for fiscal year
2005- 2006, all of which are expected to be used during that time.
Mike Moseley, Director, DMH, gave a further explanation of the Secretary’s
proposal for Regional Utilization Review and centralized screening, triage and referral
services, explaining that reform legislation envisioned moving from 40 area programs
to 20 LMEs and that shifting certain management functions to a regional level is
expected to create efficiencies.
Kitty Barnes, Chair of the Catawba County Board of Commissioners and
President of the N. C. County Commissioners Association, provided a response to the
Secretary’s proposal. She explained the ways that counties are involved with LMEs.
Counties provide funding, perform administrative functions, provide physical locations
for some LMEs, and perform oversight of the jails. She voiced concern that the
timeframe for consolidation of the UR function ( by December 15, 2005) could make
continued provision of services by her LME difficult.
David Swann, responding to the Secretary’s proposal, voiced concern about the
short time frame for the regional UR consolidation. He also stated that the North
Carolina Council of Community Programs believes the proposal is premature.
November 9, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its third meeting on Wednesday,
November 9, 2005, at 9: 00 A. M. in Room 544 of the Legislative Office Building.
Ben Popkin, Research Division, gave a presentation on the law addressing LME
organization and governance structures, both pre and post- reform. Of the six options
available, only one ( the multi- county county program) requires a catchment area of at
least 200,000 in population or a minimum of 5 counties.
Shawn Parker, Research Division, gave an historic and current configuration of
area and county programs, providing the committee with maps of LME configurations
in both 1997 ( 41 area programs with populations ranging from 56,000 to 770,000) and
present day ( 29 catchment areas with populations ranging from 75,000 to 770,000). Mr.
Parker then reviewed progress since last year's report, highlighting service array, LME
functions and the status of the State institutions.
Lisa Hollowell, Fiscal Research Division, gave a presentation on developing
management capacity, detailing the LME functions and the allocations based on the
Cost Model SFY 2005- 2006 and showing the total amounts allocated for the nine
functions performed by each LME.
Kory Goldsmith, Research Division, then gave a broad explanation of powers
and duties of the Secretary of Health and Human Services. This included the
5
development of the State Plan, oversight of the operation of State facilities,
administration of the Mental Health Trust Fund, monitoring and oversight of LMEs,
and the protection of client rights.
Flo Stein, Chief of Community Policy Management, DMH, explained the
Division’s role in assisting LMEs with key function implementation, explaining that
much attention is being focused on the provider community in the areas of payment,
quality of services, provider management governance and infrastructure.
Dr. Michael Lancaster, Chief of Clinical Policy, DMH, gave an overview of
Crisis/ Emergency Services, explaining how crisis services are provided in the overall
reform system. He reviewed the screening process, discussed the differences in the 3
levels of crisis services ( emergent, urgent and routine), and stressed the importance of
having a community- based hospital that participates in the mental health system.
Marti Wagner, Regional Director of Operations for Telecare Corporation,
working primarily with Durham Center ACCESS as well as the Crisis Recovery Centers
at Kannapolis and Statesville, gave a presentation as a provider of crisis services,
focusing on programs and implementation, outcomes, challenges and barriers to crisis
services.
Julie Sinclair, Crisis Services Director for Southeastern Regional MHDDSAS,
reviewed the establishment and current operations of mobile crisis services in her area.
Mike Moseley, Director, DMH, gave an update on the Secretary’s Regional UR
proposal, pointing out the foundation that created the cost model and stating that the
LMEs have been unable or unwilling to achieve the economies of scale assumed by the
model.
Carol Clayton, Director of the N. C. Council of Community Programs, responded
to the Secretary’s proposal by requesting that the Secretary consider four points: 1)
allow local communities to make their own decisions about how to best partner and
create more efficiencies; 2) allow LMEs adequate time to digest the information and to
make changes; 3) provide specific information regarding the target the Secretary is
trying to achieve and how much money must be spent on the management function;
and 4) work together to create efficiencies in order to reallocate dollars.
Patrice Roesler from the Association of County Commissioners, responded to the
Secretary’s proposal, encouraging members to look at the public value financial
accountability, additional oversight gained by having proximity to the clients, and the
number of counties in each proposed region.
December 14, 2005
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its fourth meeting on Wednesday,
December 14, 2005, at 12: 30 P. M. in Room 544 of the Legislative Office Building.
Lisa Hollowell, Fiscal Research Division, gave a presentation on cash flow issues,
addressing cash flow problems at the State, LME, and provider levels.
6
Senator Nesbitt, Co- Chair, announced that an Advisory Committee made up of
three House members and three Senate members would be appointed to the LOC. He
welcomed Senator Larry Shaw to the meeting. Advisory members have an interest in
the issues, but serve as non- voting members who otherwise participate fully.
Kory Goldsmith, Research Division, provided an overview of the reform
legislation addressing the core services of screening, assessment, and referral. Twenty-five
of the twenty- nine LMEs had signed a performance contract with the State for 2004-
2007 that further specifies their obligations for these core services.
Susan Campbell, Manager of Access and Care Management of the Guilford
Center, spoke about an LME's experience in developing an access line and providing
this service. She introduced Jeff McCloud of the N. C. Mental Health Consumers
Organization who demonstrated how the access line worked by calling the Guilford
Center’s 1- 800 number. The committee listened to a conversation between Mr.
McCloud and a trained call center representative.
Committee members then listened to a discussion by LME directors and medical
directors regarding the factors and barriers affecting the development of LME
functions. The panel included: Joy Futrell, Area Director, Roanoke- Chowan Human
Services Center; Ms. Ellen S. Holliman, Area Director, Durham Center; Dr. Beth Stanton,
Medical Director, New Vistas Behavioral Health Service, Asheville; and Mr. Michael
Watson, Area Director, Sandhills Center.
Mike Moseley, Director, DMH, then gave a Division update on regional UR and
the status of the Medicaid State Plan amendment. He explained that the Federal
Centers for Medicare and Medicaid Services ( CMS) delay in the approval of the new
Service Definitions continued to be a major destabilizing issue.
January 26, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its fifth meeting on Thursday, January
26, 2006, at 9: 30 A. M. in Room 643 of the Legislative Office Building.
Representative Insko, Co- Chair, asked Leza Wainwright, Deputy Director, DMH,
to come forward and give an overview of community services for the Developmental
Disabilities ( DD) population. Ms. Wainwright began with an explanation of the topics
covered in her presentation, explaining how DD was defined in G. S. 122C- 3( 12a) and
listed the State funded services for DD. Ms. Wainwright then reviewed the Medicaid
funded DD services explaining the criteria for ICF/ MR ( Intermediate Care
Facility/ Mental Retardation) eligibility and the guidelines for Home and Community
Based waivers. The average cost per person, per waiver last year was $ 43,000 and the
average for ICF/ MR was $ 86,000.
Diann Irvin, Section Chief, Behavioral Support Services with the Department of
Public Instruction, addressed how public schools were going to identify those children
who would lose CBS services in schools and how the services might be replaced.
7
Dave Richard, Director of the ARC of North Carolina and representing the DD
Consortium, said that the Consortium responded favorably to the Department’s plan to
replace CBS services, but expressed concern over the short amount of time the LMEs,
provider organizations, and State agencies had for implementation.
Representative Insko then asked a panel consisting of a consumer, a provider, a
family member and advocates to give their experiences with community services for the
DD population. Participating in the panel were: Jill Hinton Keel, Director of the Autism
Society of North Carolina; Kathy Bryan, Director of Orange Enterprises; Laura Gorycki,
an advocate for individuals and families from the Enrichment Center in Winston- Salem;
Jim Woolsey, a parent of a developmentally disabled son; and Rose Reaves, a consumer.
Mike Moseley, Director, DMH, gave an update on the CMS approval of the new
service definitions and stated that the new services would become effective March 20,
2006. Mr. Moseley briefly covered the Provider endorsement process and said that since
the State Plan amendment was approved, 646 providers had been endorsed statewide.
Mr. Moseley then gave an update on the Secretary’s proposal for regional Utilization
Review ( UR) and Screening, Triage and Referral ( STR), providing an estimated net cost
savings of $ 14.5 million in State dollars.
Leza Wainwright, Deputy Director, DMH, addressed the requirements of the use
of non- Medicaid funds. She addressed the ability of LMEs to shift funds from one
age/ disability category to another.
February 16, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its sixth meeting on Thursday, February
16, 2006, at 9: 00 A. M. in Room 643 of the Legislative Office Building.
Leza Wainwright, Deputy Director, DMH, reviewed the new and modified
service definitions for adults and children with mental illness. She stated that the new
service definitions would go into effect March 20, 2006, because according to CMS
requirements, the definitions have to be implemented in the same quarter in which they
are approved. Ms. Wainwright then spoke about a range of service definitions and
discussed a wide range of anticipated issues in implementing those definitions.
Senator Nesbitt, Co- Chair, asked panelists to comment on barriers, challenges
and recommendations to develop service capacity for mental health services. The
panelists were: Becky Faucette, a family member of an adult with mental illness;
Charles Davis, Director, NC Mentor; Anita Harrison, a parent of a child with a mental
illness; and Tisha Gamboa, a consumer of mental health services and Executive Director
of the NC Mental Health Consumers’ Organization.
Senator Nesbitt then asked the substance abuse services panelists to give their
comments regarding barriers, challenges and recommendations. The SAS panelists
included: Margaret Stargell, CEO of Coastal Horizons; Tamiko Cory consumer in
recovery; Larry Coley, consumer in recovery; and Tim Hall, Chair of the Substance
Abuse Federation.
8
Senator Nesbitt then asked the following panelists to comment on the role of
consumers in reform: Dan Herr, Chair, Orange- Person- Chatham County Consumer and
Family Advisory Committee ( CFAC); Jeff McLoud, Vice President, NC Mental Health
Consumer’s Organization; Carol Matthieu, Member of Rockingham County CFAC; and
Ron Huber, Member, State CFAC.
Arey Grady, board member of the Neuse Center LME, gave comments regarding
the role of the local board in reform and identified challenges facing local boards.
Flo Stein, Chief of Community Policy Management, DMH, then spoke on the
new service definitions for Substance Abuse Services, noting that the new definitions
would include a more credentialed workforce and generate more Medicaid funding
than is currently available.
March 22, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its seventh meeting on Wednesday,
March 22, 2006, at 9: 00 A. M. in Room 643 of the Legislative Office Building,
Carol Shaw, Fiscal Research Division, gave a presentation on Medicaid eligibility
criteria and presented case studies to clarify what types of individuals and situations
would and would not qualify for Medicaid coverage.
Lisa Hollowell, Fiscal Research Division, reviewed the 2- year historical budget
information for DMH and presented the authorized budget of the current year. Ms.
Hollowell then defined the target populations in each of the disability groups and the
types of services available to those persons.
Ms. Hollowell explained the method and assumptions she used in calculating an
estimation of need for additional funding in North Carolina. She also explained a chart
showing 2005 year- end service data listing each LME, the total population served, the
year- end budget and expenditures, service dollar allocation per capita, and the average
spent on services per client. Ms. Hollowell then gave an update on State Psychiatric
hospital downsizing, reviewed the provisions of law showing the direction the General
Assembly provided regarding savings and recurring and non- recurring savings that are
generated from the closure of beds, and reviewed the annual recurring savings.
Kory Goldsmith, Research Division, gave a review of the special provisions
regarding various studies DMH had been directed to undertake, including a study of
the financing of the MHDDSAS system originally due July 1, 2005, now due March 1,
2006.
Phillip Hoffman, Chief of Resource/ Regulatory Management, DMH, apologized
for the delay of the Finance Study report and provided members with an update and an
estimated June 2006 delivery date.
Steve Hairston, Chief of Operations Support, DMH, addressed service gaps and
the Long Term Plan for meeting MHDDSA service needs and announced that a final
report would be submitted June 30, 2006.
9
Leza Wainwright, Deputy Director, DMH, gave an update on regional
Utilization Review and Screening, Triage and Referral ( UR/ STR) with a brief overview
of the application and evaluation process for selecting LMEs to perform UR functions.
A review team determined that no LME met the required standards. This means the
current Medicaid contractor doing UR for MHDDSA services and previously selected
through an RFP process ( Value Options) will perform all Medicaid UR functions with
the exception of the five counties that comprise the Piedmont catchment area.
The review committee identified five LMEs to perform regional after hours STR.
There were some partnerships where a program was not identified as having the
capacity to perform the function. A decision as to how to perform the after hours STR
in those catchment areas will be determined at a later date.
April 12, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services held its eighth meeting on Wednesday, April
12, 2006, at 1: 30 P. M. in Room 643 of the Legislative Office Building.
Kory Goldsmith, Research Division, reviewed a packet of information that
addressed committee member questions from the previous meeting. They included
residency requirements by Medicaid; the use of target populations in other states; a
chart showing contributions by each county to its LME; and questions regarding
Utilization Review ( UR) and Screening, Triage, and Referral ( STR).
Representative Insko, Co- Chair, recognized two nationally known experts, Val
Bradley with the Human Services Research Institute and Steve Day from Technical
Assistance Collaborative, to present an outline of qualitative measures that the federal
government and states like North Carolina are utilizing to measure system success.
North Carolina already collects most of the data mentioned in the various domains to
be measured – data in claims files; demographic information in the client data
warehouse; consumer outcomes indicators; quarterly and annual reports from the
LMEs; and the National Core Indicators pilot project. Given that North Carolina has the
data, what remains is the need to be open to an analysis of the data and interpretation
among stakeholders.
Flo Stein, Chief of Community Policy Management, DMH, gave a brief overview
of how the Division is gathering and using data and other indicators. Spencer Clark,
Director of Operations and Clinical Services, DMH, gave an overview of reports that are
currently produced to show the kind of data in existence and how it might be
presented.
Kory Goldsmith, Research Division, presented the draft findings and
recommendations of the LOC. The findings and recommendations addressed: building
community capacity and financing reform, facility- based and non- facility based crisis
services; the Department of Health and Human Services and the Division of
MH/ DD/ SAS.
10
Senator Nesbitt, Co- Chair, asked members to review the document and to make
changes or recommendations so staff could revise the report in time for the next
meeting. He said the total amount of the proposal was $ 104,598,000 in recurring funds
and $ 55,000,000 in non- recurring funds. Senator Malone suggested that a statement be
included in the narrative recognizing that the Department had not been given adequate
funding to make system reform succeed. Senator Nesbitt added that there had also been
a recession that created additional problems.
April 27, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services met on Thursday, April 27, 2006, at 1: 30 P. M.
in Room 544 of the Legislative Office Building.
Representative Insko, Co- Chair, said that many comments had been received and
incorporated into the revised proposals and other comments were under consideration.
She also said that the proposals would be in bill form to be approved at the next
meeting on May 10th.
Kory Goldsmith, Research Division, and Andrea Russo, Fiscal Research,
reviewed the revised proposals.
Members suggested adding a provision to the report stating that any savings
realized from financing the 400 independent and supportive living apartments be used
to assist the Healing Place and others similar establishments.
Representative Insko then asked members of the public who had signed- up prior
to the meeting to come forward and provide the Committee with their thoughts on the
proposals. Those addressing the Committee were: David Swann, Mike Watson, Mary
Short, Martha Brock, Jay Zamagoca, Robin Huffman, Chris Estes, Laurie Coker, Dave
Richard, Will Callison, Sally Cameron, Louise Fisher, Paula Cox Fishman, Carol
Matthew, Mark Botts, Margaret Weller- Stargell, and Nancy Carey.
Senator Nesbitt, Co- Chair, suggested that the Committee add a paragraph to the
report to increase insurance coverage for mental health and to move parity ahead. He
also suggested adding a statement in the Introduction stating that this effort is a first
step in the solution to reform and the LOC will continue to work and make
recommendations to the General Assembly as it moves forward.
May 10, 2006
The Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities and
Substance Abuse Services met on Thursday, May 10, 2006, at 2: 00 P. M. in Room 643 of the
Legislative Office Building.
Representative Insko, Co- Chair, asked Kory Goldsmith, Research Division and Andrea Russo,
Fiscal Research, to explain changes to the draft report.
11
Ms. Russo reviewed the first of nine legislative proposals which included a brief overview
followed by the bill drafts. On Proposal number 4, Senator Nesbitt offered an amendment to
Section 4 authorizing the Secretary to hire three positions for a Local Management Entity
Strategic Assistance Team to assist local management entities develop, implement, and maintain
their statutory responsibilities. The amendment was adopted.
Representative Insko offered an amendment to Proposal number 5, Section 17 that would clarify
that counties have the general authority to provide mh/ dd/ sa services as a public provider.. The
amendment was adopted by the committee.
Senator Nesbitt made the motion that the report be approved as amended and to authorize staff to
make technical corrections as necessary. The motion was approved by the Committee.
12
COMMITTEE FINDINGS
AND LEGISLATIVE PROPOSALS
Introduction
In 2001, the General Assembly adopted significant reform legislation to
restructure how services to those with mental illnesses, developmental disabilities
and substance abuse issues would be delivered. The foundations of reform
included: local management of the system, decreased reliance on State institutions,
community based best practice treatments, increased consumer involvement, access
to multiple and qualified providers, and performance and fiscal accountability to
the State and local governments. As part of the legislation, the General Assembly
directed the Secretary of DHHS (" Secretary") and the Division of Mental Health,
Developmental Disabilities, and Substance Abuse Services (" Division") to undertake
administering massive system reform. The reform has been overseen by the
General Assembly and the Joint Legislative Oversight Committee on Mental Health,
Developmental Disabilities, and Substance Abuse Services ( LOC).
The reform effort never assumed that the system was adequately or fairly
funded. It did attempt to shift resources from the State to the local level, to target
services to those with the most severe disabilities, and to gain administrative
efficiencies and economies of scale through consolidation. In 2001, the General
Assembly created the Mental Health Trust Fund and made a significant
appropriation of $ 50 million to assist reform. However, reform has taken place
during a time of significant budget shortfalls and intervening events have severally
diminished both the size of the Trust Fund and the State's ability to make up the
13
shortfalls. As a result, during the five years of implementation, the State has not
fully funded existing programs nor provided sufficient funds to build service
capacity at the local level. LOC staff has estimated that it would cost $ 172,585,338
to bring the current level of services to all who are eligible and who would also seek
services. This figure does not take into account any increase in the array or
availability of services. Other estimates of the State's need range from an additional
$ 475 million to fully fund substance abuse services over 5 years and $ 285 million to
bring North Carolina's per capita spending for mental health services near the
national average.
In recognition of these shortcomings, the LOC makes the findings and
proposals on the following pages. The total appropriations recommended herein
are $ 156,603,769. Of that, $ 100.3 million are recurring funds and $ 56.3 million are
non- recurring. The LOC recognizes that additional funds will need to be
appropriated in the future to fully implement a mental health, developmental
disabilities, and substance abuse system. However, the proposals in this report
constitute a bold step forward. The LOC believes this is an appropriate amount of
new funding at this point in time and that it will move the system significantly
towards its goals.
1. State Funding for MH/ DD/ SA Services and Funding Allocations
The total ( state and federal) actual expenditures for FY04/ 05 for the mental
health, developmental disabilities, and substance abuse system ( MH/ DD/ SA) were
$ 1,102,393,603.1 Of those funds, 52% or $ 575,965,746 paid for the State institutions
and 3% or $ 36,597,727 paid for administration. The remaining 44% or $ 489,830,130
was used to pay for community programs. Of the total funds appropriated by the
State, $ 580,479,364 ( or 53%) were state funds.
1 This amount does not include Medicaid funds flowing to the community or directly to providers.
14
In FY2005, the average State funds expended per person served with a
developmental disability were $ 10,192. The average State funds expended per
person served with a mental illness were $ 1,001. The average State funds expended
per person served with a substance abuse diagnosis were $ 1,028. During FY2005,
the State paid a total of $ 124,951,834 in claims for developmental disability services,
$ 87,037,667 in claims for mental health services, and $ 28,702,300 for substance abuse
services.
According to “ The State of the States in Developmental Disabilities: 2005” by
the Department of Psychiatry and Coleman Institute for Cognitive Disabilities at the
University of Colorado, North Carolina ranks 26th in “ fiscal effort” 2 in total
spending for MR/ DD services. Applying this same measure for mental health
services and substance abuse services, North Carolina ranked 44th in fiscal effort for
mental health services and 27th in fiscal effort for substance abuse services3.
According to a report issued by the North Carolina Psychiatric Association, it
would cost an additional $ 285,500,000 to bring North Carolina's per capita spending
on mental health services to 88.8% of the national per capita spending in FY2002-
2003.4 According to the 2001 report to the LOC by MGT of America5, the estimated
cost of implementing a complete substance abuse system in North Carolina over a
5- year period would require an additional $ 71,000,000 funding in FY 2003,
2 In this report, “ fiscal effort” is defined as spending for services per $ 1,000 of aggregate
statewide personal income.
3 For mental health services “ fiscal effort”, staff used the data from National Alliance on Mental
Illness. Grading the States: A Report on America's Health Care system for Serious Mental Illness,
published March 1, 2006. For substance abuse services, staff used statewide substance abuse
spending data obtained from SAMHSA and population and income figures from the 2000 Census.
4 The 88.8% figure represents North Carolina's average income in relationship to the national
average income.
5 MGT of America. Study of Mental Health/ Substance Abuse Facilities and Their Role in North
Carolina's System of Care, Final Report to the Joint Legislative Committee on Mental Health,
Developmental Disabilities, and Substance Abuse Services, October 2001.
15
$ 74,000,000 for FYs 2004 and 2005, and an additional $ 127,000,000 in FYs 2006 and
2007. According to information provided to the LOC by committee staff, the
estimated State funds that would be needed to serve the estimated target
populations who are not Medicaid eligible and who would seek public services
would be $ 172,585,338.6 This amount represents what it would cost to serve more
consumers based on current State spending per consumer.
Unlike Medicaid, access to State- funded services is not an entitlement. It is
the primary source for indigent care and services not covered by Medicaid. State
funding for services has remained stagnant since 2001. There have been small,
isolated budget increases mixed with budget reductions. There have been no
inflationary increases. During this same time period, North Carolina's population
has increased by an estimated 7%.
Due to changes in federal policy, the service known as Developmental
Therapies will no longer be a Medicaid reimbursable service when provided to
developmentally disabled individuals. Because of this change, the Division has
submitted, and it is the LOC's understanding that the Governor's Budget will
include, a request for $ 29,435,119 in recurring funds to cover the service. While the
LOC does not oppose this request, if funded, it will have the effect of further
exacerbating the disparity between the State expenditures for disability groups.
Most of the State appropriations are divided into disability and age
categories, and the units of local government that administer and manage the
MH/ DD/ SA system ( LMEs) are restricted from shifting funds between disabilities.
LMEs report having difficulty spending down certain funds, especially related to
substance abuse services.
6 Fiscal Research Division, Budget Overview of the Division of Mental Health, Developmental
Disabilities, and Substance Abuse Services, March 2006.
16
There is no equitable or rational allocation of State funds between LMEs.
Excluding Cross Area Service Program funding, the highest SFY 2005- 2006 State
Service Dollar allocation per capita of catchment area is $ 48.18, and the lowest is
$ 21.80. The State allocation per capita is $ 34.15. The median State service dollar per
capita is $ 37.65. Although the reform legislation of 2001 recognized the need to
address this situation, to date, neither the LOC nor the Division have developed
any recommendations.
2. Building Community Capacity/ Financing Reform
In 1999, the United State Supreme Court held in Olmstead v. L. C. and E. W.
that states have an obligation to provide community- based treatment for persons
with mental disabilities. In 2001, the General Assembly created the Mental Health
Trust Fund ( Trust Fund, G. S. 143- 15.3D) and appropriated $ 50 million to it. In that
same year, the Governor used his emergency powers to transfer $ 37.5 million from
the Trust Fund due to the budget crisis. Although the General Assembly has
appropriated over $ 30 million to the Trust Fund since 2001, those amounts have not
been sufficient to replace what was lost and have not been sufficient to successfully
implement system reform.
The LOC recognizes that affordable and appropriate housing is a critical
element of a community's capacity to successfully transition MH/ DD/ SAS
consumers from institutions to the community. There are not sufficient affordable
and appropriate housing resources for MH/ DD/ SAS consumers in this State and
that situation significantly impedes the State's ability to comply with Olmstead.
G. S. 143- 15.3D( b) provides that the purposes for which the funds in the Trust
Fund may be used are:
17
( 1) Start- up and operating support for cost- effective community
treatment alternatives for individuals currently residing in the State's mental
health, developmental disabilities, and substance abuse services institutions.
( 2) Facilitate the State's compliance with the United States Supreme Court
decision in Olmstead v. L. C. and E. W.
( 3) Facilitate reform of the mental health, developmental disabilities, and
substance abuse services system and expand and enhance treatment and
prevention services in these program areas to remove waiting lists and
provide appropriate and safe services for clients.
( 4) Provide bridge funding to maintain appropriate client services during
transitional periods as a result of facility closings.
( 5) Construct, repair, and renovate State mental health, developmental
disabilities, and substance abuse services facilities.
The 2001, 2003, and 2005 budgets provide that recurring savings realized
from downsizing of the of State psychiatric hospitals would be retained by DHHS
for implementation of the hospital downsizing and to support the recurring costs of
additional community- based placements. In 2003, the General Assembly passed the
Psychiatric Hospital Financing Act ( S. L. 2003- 314). It provided that the new
psychiatric hospital would be financed through certificates of participation. It also
amended the Mental Health Trust Fund to provide that recurring savings realized
from the closure of any State psychiatric hospitals would not revert to the General
Fund but would be used for the payment of debt service for the construction of a
new State psychiatric hospital. Any remainder not needed for the debt service was
to be credited to the Department of Health and Human Services to be used only for
compliance with the Olmstead decision and to facilitate mental health reform. The
provisions regarding the use of recurring savings from hospital downsizing
18
contained in the 2005 Budget and in the Psychiatric Hospital Financing Act appear
to be inconsistent.
Downsizing of the State psychiatric hospitals has slowed substantially in the
last few years due to the lack of community capacity to successfully place
MH/ DD/ SAS consumers in the community. The estimated debt service on new a
psychiatric hospital for State fiscal year 2006- 2007 will be $ 6,206,680. To date, the
Division has realized $ 3.4 million dollars in recurring savings from downsizing the
Dorothea Dix and John Umstead psychiatric hospitals that can be used to offset the
projected debt service in FY 06- 07 and thereafter. There are not sufficient savings
being realized from downsizing to meet fully the debt service cost, and there are no
excess funds to shift to community programs.
The apparent inconsistency regarding the use of recurring savings from
downsizing combined with the delay in realized savings from downsizing impedes
the State's ability to comply with Olmstead and implement system reform.
According to a collaborative project published by the North Carolina Health
Education Centers ( NC AHEC), the Department of Psychiatry and Behavioral
Sciences, Duke University School of Medicine, and the Cecil G. Sheps Center for
Health Service Research, UNC- CH, 7 North Carolina ranks 20th in the nation in
psychiatrists per 10,000 population, but due to the state's rapid populations
increases, that situation is expected to worsen in the coming years. In addition, 44
counties have a shortage of general psychiatrists, and 43 counties have no child
psychiatrists. Also, due to the slow growth in the supply of psychiatrists, public
mental health provider groups and especially rural provider groups face stiff
competition in recruiting and retaining psychiatrists to their practices. According to
7 " The Supply and Distribution of Psychiatrists in North Carolina: Pressing Issues in the Context of
Mental Health Reform, January 2006.
19
a report published by the National Conference of State Legislators8 almost one in
five children in the U. S. has a diagnosable mental disorder. However, only about
20- 25% of those children receive treatment. The gap in treatment is attributed in
part to the lack of child and adolescent psychiatrists. Some states are addressing
these issues by expanding the use of telemedicine practices to serve children in
rural areas. Congress is considering establishing education incentives to recruit
child psychiatry residency programs with an estimated cost of $ 45 million for FY
2006 to 2007.9
3. Facility- based and Non- Facility based Crisis Services
G. S. 122C- 2 provides that, within available resources, State and local
government shall ensure that certain " core services", including emergency services,
are available to all persons in this State. G. S. 122C- 115.2( b)( 1) h. requires area
authorities and county programs to develop a business plan that ensures access to
core services, including crisis services. G. S. 122C- 117( a)( 14) provides that crisis
services do not require prior authorization, shall be designed for prevention,
intervention and resolution, do not consist solely of triage and transfer, and shall be
provided in the least restrictive setting possible consistent with individual and
family needs and community safety.
Appropriate crisis services are not consistently available across the State.
There are not a sufficient number of community hospital psychiatric beds to meet
local needs. At least three catchment areas have no community hospital psychiatric
beds available. At least four catchment areas have no facility- based crisis services
available, and those facilities that are available frequently serve limited populations.
8 " Child Psychiatrist Shortage Looms", Michelle Herman, March 2006.
9 The Child Health Care Crisis Relief Act ( H. R. 1106/ S 537).
20
Certain crisis services, especially those that are facility- based, must serve large
regions in order to be cost effective.
Area authorities and county programs do not have sufficient " start- up" funds
to develop and establish new crisis services. There are inadequate State funds to
pay for crisis services to the non- Medicaid eligible population.
Certain crisis services must be available at all times regardless of whether the
service is being utilized at any particular time. However, the fee for service
structure makes it difficult for area authorities and county programs to ensure that
necessary professionals will be accessible at all times. It is not clear whether the
approved rate for psychiatrists will be sufficient to assure that those services will be
available on a continuous basis.
4. Department of Health and Human Services/ Division of MH/ DD/ SAS
In 2001, the General Assembly directed the Secretary of DHHS and the
Division of MH/ DD/ SAS to undertake administering massive system reform. This
reform has taken place during a time of budget crisis and changing federal
requirements. While recognizing that this undertaking has been extremely
challenging, that the State has not fully funded the system, and that the task is not
finished; in order to be successful, the Secretary and the Division must demonstrate
strong leadership and vision in the future.
The State Plan has been reissued each year but has not functioned as the
strategic planning document that the General Assembly requested. In particular, it
is not clear whether the plans are cumulative or supersede each other, which tasks
have been accomplished and which are left to be done, and whether system reform
is improving services to consumers.
The Secretary has failed to adopt rules as directed under G. S. 122C- 112.1,
failed to utilize her authority when approving business plans to move area
21
authorities and county programs towards greater administrative efficiencies, and
has implemented policy in a manner that produced distrust among stakeholders
and threatened to further destabilize a fragile system.
The Division has allowed the time- lines for State and local implementation to
become disconnected, has failed to provide sufficient technical assistance to LMEs,
and has been reluctant to impose " State- wideness" in situations where uniform
standards have been necessary.
5. Local Management Entities ( LMEs)
The role of local MH/ DD/ SAS programs changed significantly under
system reform from that of a service provider to a manager of services. As a result,
local programs may only provide services if they receive a waiver from the
Secretary. The managerial powers and duties of local programs are not as clearly
defined and must be inferred from the statutory requirements of the local business
plan.
The responsibility of LMEs to conduct utilization review ( UR) for Medicaid
services is not clearly articulated in Chapter 122C. It appears that LMEs were
expected to develop that capacity for the following reasons: the LME cost model
includes funding for this function; the Division solicited applications from LMEs to
receive approval to implement the function; and the 2005 RFP for a state- wide
Medicaid UR vender provided that between 2 and 6 LMEs were expected to
conduct UR during the contract period. Despite these expectations, the Secretary
has determined that all Medicaid UR will be conducted by a state- wide vendor for
at least the next three years. While the LOC recognizes the Secretary's obligation
under Medicaid to ensure " State- wideness", it finds that the process she undertook
to implement this significantly undermined the stability of the public system. The
LOC also finds that by removing this function from the public sector, the Secretary
22
may significantly undermine the ability of LMEs to manage services in their
catchment areas. In light of these changes, the LOC finds that utilization review for
State- funded services and screening, triage and referral of all crisis calls are
necessary components to the management role of local programs.
In 2001, the General Assembly directed the Secretary to develop a plan to
accomplish the consolidation of area authorities so that by January 1, 2007, there
would be 20 total programs. While Chapter 122C does specifically mandate
consolidation, the General Assembly's intent was clear. The Secretary did not
utilize her statutory authority to achieve consolidation through the approval of
local business plans and there are currently 29 LMEs. According to the Secretary's
report to the General Assembly, there are very few additional mergers to be
realized. The LOC finds that additional consolidations are necessary to accomplish
system reform.
In 2001, the General Assembly recognized that competent management was
critical to the success of system reform. It amended G. S. 122C- 121( d) to provide
that area programs directors must have a master's degree, as well as related and
managerial experience. The LOC finds that the success of an area program is
largely dependent upon the ability of the director to understand and implement
system reform. It also finds that the current statutory qualifications are drawn very
broadly and may not capture the necessary skills. The LOC also finds that the
position of the LME finance officer is critical to sound fiscal management, but there
are no statutory requirements for that position.
G. S. 122C- 119.1 requires all area board members to " receive initial
orientation" on their responsibilities. It also requires DHHS to provide training in
" fiscal management, budget development, and fiscal accountability". The LOC
23
finds that it is critical that board members receive this training and that there
should be some mechanism to enforce this requirement.
6. Consumers
In 2001, the General Assembly recognized the importance of consumers in
system reform. It directed that the State Plan provide for “ consumer involvement
in planning and management of system services”. The State Plan directed that each
LME establish a local Consumer and Family Advisory Committee ( CFAC) and
charged the CFACs with participating in and commenting on the LMEs business
plans and operating budgets. The State Plan also created the State CFAC, whose
members are appointed by the Secretary.
The LOC finds that it is important to focus and formalize the advisory role of
consumers in system reform. It also finds that representation on the State CFAC
should be broadened to include appointments by other stakeholders.
7. Providers
Providers are one of the major components in system reform and service
delivery. The success of reform depends in large part upon a provider system in
which high quality services are available in sufficient quantity to meet the identified
needs of consumers. However, at the same time that the public system has needed
more and better providers to deliver services, a variety of circumstances have made
it very difficult for both established and newly created providers to survive
financially.
LMEs have adopted differing provider contracts and required differing
levels of utilization control. There has not been a uniform definition of what
constitutes a clean claim, resulting in confusion in what is required for billing and
delays in payments. Providers also report excessive and unnecessary paperwork in
order to obtain authorization to provide services.
24
System reform also requires providers to implement new services based
upon evidence based- practices. Utilization of these best practices will result in
better services to consumers, and will be a better use of public funds because the
services have been shown to be more effective.
The Division has developed a Provider Action Agenda to address many of
these issues. The authority of the Division to implement uniform processes and
procedures should be clarified.
8. Joint Legislative Oversight Committee on
Mental Health, Developmental Disabilities, and Substance Abuse Services
The Joint Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services was created in 2000 to develop a plan for
reform of the MH/ DD/ SA system. The committee and its multiple subcommittees
met repeatedly during the interim and into the Regular Session of the 2001 General
Assembly. The resulting legislation ( HB 381, S. L. 2001- 437) significantly
restructured the system and put in place the framework of reform. The foundations
of reform include: local management of the system, decreased reliance on State
institutions, community based best practice treatments, increased consumer
involvement, access to multiple and qualified providers, and performance and
fiscal accountability to the State and local governments.
The LOC is charged with examining on a continuing basis system- wide
issues affecting the development, financing, administration, and delivery of
MH/ DD/ SA services. It is also charged with studying the budget, programs,
administrative organization, and policies of DHHS to determine ways in which the
General Assembly may encourage improvement in mental health, developmental
disabilities, and substance abuse services provided in North Carolina. In this
capacity, the LOC has replaced the Legislative Study Commission on Mental
25
Health, Developmental Disabilities, and Substance Abuse Services ( Commission) as
the legislative entity monitoring the MH/ DD/ SA system. The Commission has
been inactive since passage of the reform legislation, and all reports previously
submitted to the Commission now come to the LOC.
9. Increased Insurance Coverage
The LOC recommends that private and public insurance providers increase
the amount of coverage they offer their members, and that the coverage include
treatment for mental illness and substance abuse.
Conclusion
The Legislative Oversight Committee on Mental Health, Developmental
Disabilities and Substance Abuse Services makes the following eight
recommendations to the 2006 Regular Session of the 2005 General Assembly. Each
proposal is followed by a bill draft and, if it has a fiscal impact, a fiscal
memorandum indicating any anticipated revenue gain or loss resulting from the
proposal.
1. Increase State funding for MH/ DD/ SA Services
2. MH/ DD/ SA Community Capacity/ Financing Reform
3. Increase MH/ DD/ SA Crisis Services
4. Strengthen State MH/ DD/ SA Reform
5. Strengthen LMEs
6. Consumer and Family Advisory Committees
7. Strengthen MH/ DD/ SA Private Providers
8. Strengthen LOC Oversight Role
26
LEGISLATIVE PROPOSAL # 1
INCREASE STATE FUNDING FOR MH/ DD/ SA SERVICES
27
LEGISLATIVE PROPOSAL # 1:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO INCREASE STATE FUNDING AND FLEXIBILITY FOR
MH/ DD/ SA SERVICES.
SHORT TITLE: Increase State funding for MH/ DD/ SA Services
BRIEF OVERVIEW: This bill would:
1. Appropriate $ 72,888,259 ( recurring) to be used for state- funded services to be
allocated as follows:
a. $ 29,435,119 for Development Therapy services for the developmentally
disabled.
b. $ 21,726,070 to be used for State funded mental health services.
c. $ 21,726,070 to be used for State funded substance abuse services.
d. The funds allocated for mental health and substance abuse services would
be allocated to those LMEs whose current state service dollar allocation per capita is
less than the median State service dollar per capita allocation ($ 37.65) based on the
SFY 05- 06 allocations.
2. Allow LMEs the flexibility to shift up to 15% of their funds between age and
disability categories. This provision would sunset July 1, 2007.
EFFECTIVE DATE: This bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
28
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 23 [ v. 8] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 11/ 2006 10: 32: 54 AM
Short Title: Increase State funding for MH/ DD/ SA Services. ( Public)
Sponsors: .
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO INCREASE STATE FUNDING AND FLEXIBILITY FOR MENTAL
3 HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
4 SERVICES AS RECOMMENDED BY THE JOINT LEGISLATIVE OVERSIGHT
5 COMMITTEE FOR MENTAL HEALTH, DEVELOPMENTAL DISABILITIES
6 AND SUBSTANCE ABUSE SERVICES.
7 The General Assembly of North Carolina enacts:
8 SECTION 1. There is appropriated from the General Fund to the
9 Department of Health and Human Services the sum of seventy- two million eight
10 hundred eighty- eight thousand two hundred fifty- nine dollars ($ 72,888,259) for the
11 2006- 2007 fiscal year that to be allocated as follows:
12 1. $ 29,435,119 to pay for developmental therapies for the
13 developmentally disabled. The Division shall develop rigorous care
14 management requirements for this service.
15 2. $ 21,726,070 to pay for mental health services.
16 3. $ 21,726,070 to pay for substance abuse services.
17 4. The funds allocated under subsections ( 2) and ( 3) of this section shall
18 be allocated to those area authorities and county programs where the
19 current state service dollar allocation per capita is less than the median
20 state service dollar per capita allocation, which is $ 37.65 based upon
21 the State fiscal year 2005- 2006 allocations.
22 SECTION 2. Notwithstanding G. S. 143- 23, an area authority or a county
23 program may transfer from one age or disability category to a different age or disability
24 category up to fifteen percent ( 15%) of the funds initially allocated to the age or
25 disability category from which funds are being transferred. Area authorities and county
26 programs shall:
29
1 ( 1) publicly document that they have addressed the service needs of the
2 category from which the funds are being transferred before any
3 transfer may occur, and
4 ( 2) submit the required documentation to the Division of Mental Health,
5 Developmental Disabilities and Substance Abuse Services and to the
6 Fiscal Research Division within 15 days of making the transfer.
7 SECTION 3. This act becomes effective July 1, 2006. Section 2 expires
8 July 1, 2007. The Fiscal Research Division shall track the allocation and utilization of
9 the funds appropriated under this act.
10
30
LEGISLATIVE PROPOSAL # 2
MH/ DD/ SA COMMUNITY
CAPACITY/ FINANCING REFORM
31
LEGISLATIVE PROPOSAL # 2:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO APPROPRIATE FUNDS TO INCREASE INDEPENDENT AND
SUPPORTIVE LIVING APARTMENTS FOR PERSONS WITH MH/ DD/ SA
DISABILITIES; TO REVISE THE PSYCHIATRIC HOSPITAL FINANCING ACT; TO
CREATE INCENTIVES FOR PSYCHIATRISTS TO WORK IN UNDERSERVED
COMMUNITIES; AND TO APPROPRIATE FUNDS TO THE MENTAL HEALTH
TRUST FUND.
SHORT TITLE: MH/ DD/ SA Community Capacity/ Financing Reform
BRIEF OVERVIEW: This bill would:
1. Finance 400 independent- and supportive- living apartments for individuals with
MH/ DD/ SA disabilities.
a. Appropriate $ 12,050,830 ( non- recurring) to provide an operating cost subsidy for
the apartments for 10 years.
b. Appropriate $ 11,250,000 ( non- recurring) to the North Carolina Housing Trust fund
to finance the apartments.
2. Appropriate $ 713,000 ( recurring) for on- going operations support and $ 370,000 for
start- up expenses ( non- recurring) to support 12 group home beds and 93 apartments
financed through the United States Department of Housing and Urban Development .
3. Appropriate $ 20,000,000 ( non- recurring) to the Mental Health Trust Fund.
4. Appropriate $ 6,206,680 ( recurring) for hospital debt service and reconcile the
provisions of the Psychiatric Hospital Financing Act and the 2005 Budget so that debt
service is paid from appropriations and savings from downsizing are used for building
community capacity.
5. Appropriate $ 1,000,000 ( recurring) to AHEC/ Rural Health Program to develop a
program, which may include loan repayment, to recruit psychiatrists to rural and
underserved areas to provide community services.
EFFECTIVE DATE: The bill would become effective July 1, 2006.
A copy of the proposed legislation and fiscal memorandum begin on the next page
32
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 22 [ v. 9] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 9/ 2006 2: 09: 35 PM
Short Title: MH/ DD/ SA Community Capacity/ Financing Reform. ( Public)
Sponsors: ( By Request).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO APPROPRIATE FUNDS TO INCREASE INDEPENDENT AND
3 SUPPORTIVE LIVING APARTMENTS FOR PERSONS WITH MENTAL
4 ILLNESS, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE
5 ADDICTIONS, TO REVISE THE PSYCHIATRIC HOSPITAL FINANCING ACT,
6 TO CREATE INCENTIVES FOR PSYCHIATRISTS TO WORK IN
7 UNDERSERVED COMMUNITIES, AND TO APPROPRIATE FUNDS TO THE
8 MENTAL HEALTH TRUST FUND AS RECOMMENDED BY THE JOINT
9 LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
10 DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE SERVICES.
11 The General Assembly of North Carolina enacts:
12 PART I. HOUSING
13 SECTION 1. There is appropriated from the General Fund to the
14 Department of Health and Human Services the sum of twelve million fifty thousand
15 eight hundred thirty dollars ($ 12,050,830) for the 2006- 2007 fiscal year to be placed in
16 the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse
17 Services and Bridge Funding Needs. The Department shall work with the North
18 Carolina Housing Finance Agency to use the funds to provide an operating cost subsidy
19 for at least four hundred ( 400) independent and supportive living apartments for
20 individuals with mental illness, development disabilities, and substance abuse
21 addictions. The apartments shall be affordable to those with incomes at the
22 Supplemental Security Income ( SSI) level.
23 SECTION 2. There is appropriated from the General Fund to the North
24 Carolina Housing Finance Agency ( HFA) the sum of eleven million two hundred fifty
25 thousand dollars ($ 11,250,000) for the 2006- 2007 fiscal year to be placed in the North
26 Carolina Housing Trust Fund. The funds shall be used to finance the construction of at
27 least four hundred ( 400) independent and supportive living apartments for individuals
33
1 with mental illness, development disabilities, and substance abuse addictions. whose
2 incomes are at the Social Security level. The apartments shall be affordable to those
3 with incomes at the Supplemental Security Income ( SSI) level. If HFA is able to finance
4 the apartments for less than the amount appropriated under this Section, any remaining
5 funds as well as any interest earned on the amount appropriated may be used to finance
6 additional apartment, group homes, and transitional housing for individuals with mental
7 illness, development disabilities, and substance abuse addictions.
8 SECTION 3. There is appropriated from the General Fund to the
9 Department of Health and Human Services for the 2006- 2007 fiscal year the sum of
10 seven hundred thirteen thousand dollars ($ 713,000) for on- going operations support and
11 three hundred seventy thousand dollars ($ 370,000) for start- up expenses to be placed in
12 the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse
13 Services and Bridge Funding Needs to support 12 group home beds and 93 apartments
14 financed through the United States Department of Housing and Urban Development
15 PART II. MENTAL HEALTH TRUST FUND
16 SECTION 4. There is appropriated from the General Fund to the Trust Fund
17 for Mental Health, Developmental Disabilities, and Substance Abuse Services and
18 Bridge Funding Needs the sum of twenty million dollars ($ 20,000,000) for the
19 2006- 2007 fiscal year.
20 SECTION 5. Section 10.24.( b) of S. L. 2005- 276 reads as rewritten:
21 " SECTION 10.24.( b) The Department shall use not less than fifty percent
22 ( 50%) of moneys in the Trust Fund established pursuant to G. S. 143- 15D for the
23 2005- 2006 2006- 2007 fiscal year for nonrecurring start- up funds for community- based
24 services, including funding for existing area program services to transition to the private
25 sector or to another public service agency. Moneys in the Trust Fund may be used to
26 expand recurring community- based services only if sufficient recurring funds can be
27 identified within the Department from funds currently budgeted for mental health,
28 developmental disabilities, and substance abuse services, area mental health programs
29 or county programs, or local government."
30 PART III. PSYCHIATRIC HOSPITAL DEBT SERVICE
31 SECTION 6. G. S. 143- 15.3D( c) reads as rewritten:
32 "( c) Notwithstanding G. S. 143- 18, any nonrecurring savings in State
33 appropriations realized from the closure of any State psychiatric hospitals that are in
34 excess of the cost of operating and maintaining a new State psychiatric hospital shall not
35 revert to the General Fund but shall be placed in the Trust Fund and shall be used for the
36 purposes authorized in this section. Notwithstanding G. S. 143- 18, recurring savings
37 realized from the closure of any State psychiatric hospitals shall not revert to the
38 General Fund but shall be used for the payment of debt service on financing contract
39 indebtedness authorized pursuant to Article 9 of Chapter 142 of the General Statutes for
40 the construction of a new State psychiatric hospital. Any remainder not needed for this
41 debt service shall be credited to the Department of Health and Human Services to be
42 used only for the purposes of subsections ( b)( 2) and ( b)( 3) of this section."
43 SECTION 7. There is appropriated from the General Fund to the Reserve
44 for Debt Service the sum of six million two hundred six thousand six hundred eighty
34
1 dollars ($ 6,206,680) for the 2006- 2007 fiscal year. The funds shall be used to pay the
2 debt service incurred by the financing of the new psychiatric hospital to replace the
3 Dorothea Dix and John Umstead State psychiatric hospitals. It is the intend of the
4 General Assembly to use funds from the General Fund to pay the debt service on the
5 new psychiatric hospital. The Department of Health and Human Services shall redirect
6 any funds previously budgeted for debt service on the new psychiatric hospital to the
7 purposes authorized under G. S. 143- 15.3D( b)( 2) and ( b)( 3).
8 PART IV. RECRUITING AND RETAINING COMMUNITY PSYCHIATRISTS
9 SECTION 8. There is appropriated from the General Fund to the Board of
10 Governors of The University of North Carolina for the 2006- 2007 fiscal year the sum of
11 one million dollars ($ 1,000,000) to be allocated to the UNC- CH Area Health Education
12 Centers ( AHEC) program. AHEC shall use the funds to develop and implement a
13 program to recruit psychiatrists to rural and underserved areas to provide community
14 services. The program may include student loan repayment.
15 SECTION 9. This act becomes effective July 1, 2006. The Fiscal Research
16 Division shall track the allocation and utilization of the funds appropriated under this
17 act.
18
19
35
GENERAL ASSEMBLY OF NORTH CAROLINA
Session 2005
FISCAL ANALYSIS MEMORANDUM
[ This confidential fiscal memorandum is a fiscal analysis of a draft bill, amendment, committee
substitute, or conference committee report that has not been formally introduced or adopted on
the chamber floor or in committee. This is not an official fiscal note. If upon introduction of the
bill you determine that a formal fiscal note is needed, please make a fiscal note request to the
Fiscal Research Division, and one will be provided under the rules of the House and the Senate.]
DATE: May 9, 2006
TO: Representative Insko and Senator Nesbitt
FROM: Jennifer Hoffmann
Fiscal Research Division
RE: 2005- RCz- 22 [ v. 10]
FISCAL IMPACT
Yes ( X) No ( ) No Estimate Available ( )
FY 2006- 07 FY 2007- 08 FY 2008- 09 FY 2009- 10 FY 2010- 11
REVENUES:
EXPENDITURES:
General Fund ( GF)
DHHS
Trust Fund for
MH/ DD/ SA
Division of
MH/ DD/ SA
NCHFA
Housing Trust
Fund
Reserve for Debt
Service
University of NC
AHEC
GF TOTAL
32,050,830
1,083,000
11,250,000
6,206,680
1,000,000
__________
51,590,510
713,000
8,982,355
1,000,000
_________
10,695,355
713,000
8,980,433
1,000,000
_________
10,693,433
713,000
8,982,269
1,000,000
___________
_
10,695,269
713,000
8,980,401
1,000,000
____________
_
10,693,401
POSITIONS
( cumulative):
36
PRINCIPAL DEPARTMENT( S) & PROGRAM( S) AFFECTED: Department of Health
and Human Service, Division of Mental Health, Developmental Disabilities, and Substance
Abuse; NC Housing Finance Agency; UNC, Area Health Education Centers; Trust Fund
MH/ DD/ SA and Bridge Funding Needs; Reserve for Debt Service
EFFECTIVE DATE: July 1, 2006
BILL SUMMARY:
Section 1 appropriates $ 12,050,830 on a non- recurring basis from the General Fund to the Department
of Health and Human Services to be placed in the Trust Fund for Mental Health, Developmental
Disabilities and Substance Abuse Services and Bridge Funding Needs ( Trust Fund for MH/ SDD/ SA) to
provide an operating cost subsidy for independent and supportive living apartments.
Section 2 appropriates $ 11,250,000 on a non- recurring basis from the General Fund to the Housing
Finance Agency to be placed in the North Carolina Housing Trust Fund to finance the construction of
independent and supportive living apartments.
Section 3 appropriates from the General Fund to the Department of Health and Human Services,
Division of Mental Health, Developmental Disabilities and Substance Abuse the following: $ 713,000
for on- going operations support and $ 370,000 for start- up expenses to support 12 group home beds and
93 apartments financed through the United States Department of Housing and Urban Development.
Section 4 appropriates $ 20,000,000 on a non- recurring basis from the General Fund to the Trust Fund
for MH/ DD/ SA for the uses set out in the Trust Fund statute.
Section 6 rewrites a section of the Trust Fund for MH/ DD/ SA ( G. S. 143- 15.3D( c)) by deleting the
directive that the recurring savings realized from the closure of any State psychiatric hospital shall be
used to repay the debt service incurred for the construction of the new State psychiatric hospital.
Clarifies that the recurring savings shall be credited to the Department of Health and Human Services
for community- based services.
Section 7 appropriates $ 6,206,680 from the General Fund to the Reserve for Debt Service in FY 2006-
07 for the debt service associated with the construction of the new psychiatric hospital. States the intent
of the General Assembly to appropriate funds from the General Fund for the debt service until the debt
is fully paid. Also, directs the Department of Health and Human Service to move funds currently
budgeted for the debt service to community- based services.
Section 8 appropriates $ 1,000,000 on a recurring basis from the General Fund to the University of North
Carolina to be allocated to the Area Health Education Centers ( AHEC) to develop and implement a
program to recruit psychiatrists to rural and underserved areas to provide community services.
ASSUMPTIONS AND METHODOLOGY: The fiscal impact of the sections that contain a direct
appropriation is the amount of the appropriation ( see table on page 1). Sections 1, 2, 3 and 4 all contain
non- recurring appropriations that affect the 2006- 07 fiscal year only. Sections 3 and 8 contain recurring
appropriations that affect all future General Fund budgets unless the General Assembly takes action to
remove these items from the budget. Section 7 also contains a recurring appropriation for the
repayment of debt service associated with the construction of the new psychiatric hospital. The exact
amount of the annual debt service varies in accordance with the debt service schedule and shall continue
until the last debt service payment is made in 2027. The 2006 COPS issuance is scheduled for the fall
and debt service was calculated using a projected interest rate of 5.75%.
According to the Office of the State Treasurer, actual and estimated debt service costs for the new
psychiatric hospital follow on page 3:
37
Psychiatric Hospital Debt Service Schedule
Authorized
COPS
Issuance by
Year
57,207,490 48,961,672 106,169,162
State Fiscal
Year
2005 Issuance
Actual Debt
Service
Payments
2006 Issuance
Est'd Debt
Service
Payments
Total Debt
Service
Payments
2005 0 0 0
2006 3,782,471 0 3,782,471
2007 4,799,032 1,407,648 6,206,680
2008 4,799,586 4,182,769 8,982,355
2009 4,798,311 4,182,122 8,980,433
2010 4,799,708 4,182,561 8,982,269
2011 4,798,493 4,181,908 8,980,401
2012 4,800,543 4,182,737 8,983,280
2013 4,799,328 4,181,888 8,981,216
2014 4,799,252 4,182,860 8,982,112
2015 4,798,417 4,182,442 8,980,859
2016 4,799,556 4,182,224 8,981,780
2017 4,799,177 4,182,760 8,981,937
2018 4,800,012 4,182,695 8,982,707
2019 4,798,569 4,182,584 8,981,153
2020 4,799,101 4,182,927 8,982,028
2021 3,795,916 4,182,317 7,978,233
2022 3,644,079 4,182,182 7,826,261
2023 3,492,243 4,182,918 7,675,161
2024 3,340,406 4,182,080 7,522,486
2025 3,188,569 4,182,902 7,371,471
2026 0 4,182,832 4,182,832
2027 4,182,212 4,182,212
Total Debt
Service per
Issuance
88,432,770 85,057,568 169,707,868
SOURCES OF DATA: Office of State Treasurer
TECHNICAL CONSIDERATIONS: None
38
LEGISLATIVE PROPOSAL # 3
INCREASE MH/ DD/ SA CRISIS SERVICES
39
LEGISLATIVE PROPOSAL # 3:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO APPROPRIATE FUNDS FOR START- UP CRISIS
SERVICES, TO HIRE A CONSULTANT TO ASSIST AREA
AUTHORITIES DEVELOP AND IMPLEMENT CRISIS SERVICES, TO
INCREASE FUNDING TO PAY FOR CRISIS SERVICES, TO ENSURE
ACCESS TO CORE PSYCHIATRIC SERVICES, AND TO EXTEND THE
SUNSET ON THE FIRST COMMITMENT PILOT PROGRAM.
SHORT TITLE: Increase MH/ DD/ SA Crisis Services.
BRIEF OVERVIEW: This bill would:
1. Appropriate $ 10,500,000 ( non- recurring) to be used by LMEs to establish a
continuum of crisis facilities regionally and crisis services locally. It would also
appropriate $ 425,000 ( non- recurring) for the General Assembly to hire a consultant to assist
LMEs with developing and implementing start- up crisis services.
2. Appropriate $ 9,000,000 ( recurring) to create a fund to be used by LMEs to pay for
non- Medicaid reimbursable crisis ( core) services.
3. Appropriate $ 9,000,000 ( recurring) for LMEs to ensure access to core psychiatrist
services.
4. Extend the sunset for the First Commitment Pilot Program from July 1, 2006 to
October 1, 2007.
EFFECTIVE DATE: This bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
40
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 24 [ v. 6] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 9/ 2006 11: 55: 42 AM
Short Title: Increase MH/ DD/ SA Crisis Services. ( Public)
Sponsors: .
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO APPROPRIATE FUNDS FOR START- UP CRISIS SERVICES, TO
3 HIRE A CONSULTANT TO ASSIST AREA AUTHORITIES AND COUNTY
4 PROGRAMS DEVELOP AND IMPLEMENT A PLAN TO CREATE A
5 CONTINUUM OF CRISIS SERVICES, TO PAY FOR CRISIS SERVICES FOR
6 NON- MEDICAID ELIGIBLE INDIGENT INDIVIDUALS, TO ENSURE ACCESS
7 TO CORE PSYCHIATRIC SERVICES, AND TO EXTEND THE SUNSET FOR
8 THE FIRST COMMITMENT PILOT PROGRAM AS RECOMMENDED BY THE
9 JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
10 DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE SERVICES.
11 The General Assembly of North Carolina enacts:
12 SECTION 1.( a). There is appropriated from the General Fund to the
13 Department of Health and Human Services the sum of ten million five hundred
14 thousand dollars ($ 10,500,000) for the 2006- 2007 fiscal year. The funds shall be used
15 by area authorities and county programs to establish a continuum of regional crisis
16 facilities and local crisis services for persons with mental illness, developmental
17 disabilities, and substance abuse addictions.
18 There is appropriated from the General Fund to the General Assembly, Legislative
19 Services Commission, the sum of four hundred twenty- five thousand dollars ($ 425,000)
20 for the 2006- 2007 fiscal year to be used by the Joint Legislative Oversight Committee
21 on Mental Health, Developmental Disabilities, and Substance Abuse Services to hire
22 one or more consults to provide technical assistance to Local Management Entities
23 ( LMEs) to develop and implement crisis services plans under this Section. The
24 consultant shall assist area authorities and county programs and crisis regions to identify
25 local and regional gaps in crisis services, identify options for providing services,
26 implement new services, and maintain transparency and accountability for the use of
27 funds.
41
1 The area authorities and county programs will organize themselves into no more
2 than twenty- one ( 21) crisis regions based upon the existing Geriatric Specialty team
3 configurations or other approved regions. The funds shall be allocated to each area
4 authority or county programs on a per capita basis. The funds may be used for
5 operational start- up, capital, or subsidies related to developing a continuum of crisis
6 services. No more than three percent ( 3%) may be spent for administrative costs. The
7 area authorities and county programs within a crisis region shall work together to
8 identify gaps in their ability to provide a continuum of crisis services for all consumers
9 and use the funds appropriated to them to develop and implement a plan to address
10 those needs. At a minimum, the plan must address the development over time of the
11 following components: 24- hour crisis telephone lines, walk- in crisis services, mobile
12 crisis outreach, crisis respite/ residential services, crisis stabilization units, 23- hour beds,
13 facility- based crisis, in- patient crisis and transportation. Options for voluntary
14 admissions to a secured facility must include at least one service appropriate to address
15 the mental health, development disability, and substance abuse needs of adults and the
16 mental health, development disability, and substance abuse needs of children. Options
17 for involuntary commitment to a secured facility must include at least one option in
18 addition to admission to a State facility.
19 If all area authorities and county programs in a crisis region determine that a
20 facility- based crisis center is needed and sustainable on a long term basis, the crisis
21 region shall attempt to secure those services through a community hospital or other
22 community facility first. If all the area authorities and county programs in the crisis
23 region determine the region's crisis needs are being met, the area authorities and county
24 programs may use the funds to meet local crisis service needs.
25 Each area authority and county program and each crisis region will be required to
26 utilize the technical assistance of a consultant under contract with the General Assembly
27 to develop and implement its crisis services plan. The consultant shall assist area
28 authorities and county programs and crisis regions to identify local and regional gaps in
29 crisis services, identify options for providing services, implement new services, and
30 maintain transparency and accountability for the use of funds. The crisis region or area
31 authorities and county programs shall submit their crisis services plan to the consultant
32 and to the Division of Mental Health, Developmental Disabilities, and Substance Abuse
33 Services ( Division) for review and public comment. The crisis regions and area
34 authorities and county programs shall consider the comments prior to submitting a final
35 plan for implementation. Upon submission of a final plan to DHHS, each crisis region,
36 area authority and county program will receive implementation funds. Funds not
37 expended during the 2006- 2007 fiscal year shall not revert.
38 Area authorities and county programs and crisis regions must report monthly to the
39 consultant and to the Division regarding the use of the funds, whether there has been a
40 reduction in the use of State psychiatric hospitals for acute admissions, and remaining
41 gaps in local and regional crisis services. The consultant shall report regularly to the
42 General Assembly, the Fiscal Research Division, and the Joint Legislative Oversight
43 Committee on Mental Health, Developmental Disabilities and Substance Abuse
42
1 Services regarding each crisis region's and area authorities' and county programs'
2 proposed and actual use of the funds.
3 SECTION 1.( b). There is appropriated from the General Fund to the
4 Department of Health and Human Services the sum of nine million dollars ($ 9,000,000)
5 for the 2006- 2007 fiscal year. These funds shall be allocated to area authorities and
6 county programs on a per capita basis. Area authorities and county programs may bill
7 this fund to pay for mental health, developmental disabilities or substance abuse crisis
8 services provided to non- Medicaid eligible adults and children who are indigent and
9 have no other third- party payment source. Nothing in this section shall prohibit an area
10 authority or county program from using other funds to provide crisis services, nor shall
11 it limit an area authority or county program's obligation under G. S. 122C- 2( 2) to
12 provide emergency services.
13 SECTION 1.( c). There is appropriated from the General Fund to the
14 Department of Health and Human Services the sum of nine million dollars ($ 9,000,000)
15 for the 2006- 2007 fiscal year. These funds shall be allocated to area authorities and
16 county programs on a per capita basis. Area authorities and county programs may use
17 these funds to maintain public access to community psychiatric services. The funds
18 may be used on a unit cost reimbursement or non- unit cost reimbursement basis.
19 SECTION 2. S. L. 2003- 178 reads as rewritten.
20 " SECTION 1. The Secretary of Health and Human Services may, upon
21 request of a phase- one local management entity, waive temporarily the requirements of
22 G. S. 122C- 261 through G. S. 122C- 263 and G. S. 122C- 281 through G. S. 122C- 283
23 pertaining to initial ( first- level) examinations by a physician or eligible psychologist of
24 individuals meeting the criteria of G. S. 122C- 261( a) or G. S. 122C- 281( a), as applicable,
25 as follows:
26 ( 1) The Secretary has received a request from a phase- one local
27 management entity to substitute for a physician or eligible
28 psychologist, a licensed clinical social worker, a masters level
29 psychiatric nurse, or a masters level certified clinical addictions
30 specialist to conduct the initial ( first- level) examinations of individuals
31 meeting the criteria of G. S. 122C- 261( a) or G. S. 122C- 281( a). The
32 waiver shall be implemented on a pilot- program basis. The request
33 from the local management entity shall be submitted as part of the
34 entity's local business plan and shall specifically describe:
35 a. How the purpose of the statutory requirement would be better
36 served by waiving the requirement and substituting the
37 proposed change under the waiver.
38 b. How the waiver will enable the local management entity to
39 improve the delivery or management of mental health,
40 developmental disabilities, and substance abuse services.
41 c. How the services to be provided by the licensed clinical social
42 worker, the masters level psychiatric nurse, or the masters level
43 certified clinical addictions specialist under the waiver are
44 within each of these professional's scope of practice.
43
1 d. How the health, safety, and welfare of individuals will continue
2 to be at least as well protected under the waiver as under the
3 statutory requirement.
4 ( 2) The Secretary shall review the request and may approve it upon
5 finding that:
6 a. The request meets the requirements of this section.
7 b. The request furthers the purposes of State policy under G. S.
8 122C- 2 and mental health, developmental disabilities, and
9 substance abuse services reform.
10 c. The request improves the delivery of mental health,
11 developmental disabilities, and substance abuse services in the
12 counties affected by the waiver and also protects the health,
13 safety, and welfare of individuals receiving these services.
14 d. The duties and responsibilities performed by the licensed
15 clinical social worker, the masters level psychiatric nurse, or the
16 masters level certified clinical addictions specialist are within
17 the individual's scope of practice.
18 ( 3) The Secretary shall evaluate the effectiveness, quality, and efficiency
19 of mental health, developmental disabilities, and substance abuse
20 services and protection of health, safety, and welfare under the waiver.
21 The Secretary shall send a report on the evaluation to the Joint
22 Legislative Oversight Committee on Mental Health, Developmental
23 Disabilities, and Substances Abuse Services on or before July 1, 2006.
24 ( 4) The waiver granted by the Secretary under this section shall be in
25 effect for a period not to exceed three years, or the period for which
26 the requesting local management entity's business plan is approved,
27 whichever is shorter. until October 1, 2007.
28 ( 5) The Secretary may grant a waiver under this section to up to five local
29 management entities that have been designated as phase- one entities as
30 of July 1, 2003.
31 ( 6) In no event shall the substitution of a licensed clinical social worker,
32 masters level psychiatric nurse, or masters level certified clinical
33 addictions specialist under a waiver granted under this section be
34 construed as authorization to expand the scope of practice of the
35 licensed clinical social worker, the masters level psychiatric nurse, or
36 the masters level certified clinical addictions specialist.
37 ( 7) The Department shall assure that staff performing the duties are
38 trained and privileged to perform the functions identified in the waiver.
39 The Department shall involve stakeholders including, but not limited
40 to, the North Carolina Psychiatric Association, The North Carolina
41 Nurses Association, National Association of Social Workers, The
42 North Carolina Substance Abuse Professional Certification Board,
43 North Carolina Psychological Association, The North Carolina Society
44
1 for Clinical Social Work, and the North Carolina Medical Society in
2 developing required staff competencies.
3 ( 8) The local management entity shall assure that a physician is available
4 at all times to provide backup support to include telephone
5 consultation and face- to- face evaluation, if necessary.
6 SECTION 2. This act becomes effective July 1, 2003, and expires July 1,
7 2006. October 1, 2007."
8 SECTION 3. This act becomes effective July 1, 2006. The Fiscal Research
9 Division shall track the allocation and utilization of the funds appropriated under this
10 Act.
45
LEGISLATIVE PROPOSAL # 4
STRENGTHEN STATE MH/ DD/ SA REFORM
46
LEGISLATIVE PROPOSAL # 4:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO STRENGTHEN STATE LEADERSHIP FOR SYSTEM
REFORM OF MH/ DD/ SA SERVICES AND TO APPROPRIATE
FUNDS.
SHORT TITLE: Strengthen State MH/ DD/ SA Reform
BRIEF OVERVIEW: This bill would:
1. Direct DHHS to consolidate recent State Plans to produce a single document that
meets the requirements of G. S 122C- 102 and contains a cumulative statement of all still-applicable
provisions of those plans, identify those directives contained in the Plan and
other communications by the Division that must be adopted as an administrative rule in
order to be enforceable, and to undertake to adopt those rules.
2. Clarify that the State Plan is a strategic document intended to provide a course of
State and local action for a 3- year period of time, that contains specific goals for system
reform, designates benchmarks for reaching those goals and identifies data that can be
utilized to measure progress towards those goals, and is coordinated with the
implementation of crisis services by LMEs.
3. Clarify that the Secretary and the Division of MH/ DD/ SAS have a duty to provide
more technical assistance to LMEs.
4. Appropriate $ 1,700,000 to DHHS ( non- recurring) to hire one or more consultants to:
a. Assist with strategic planning.
b. Increase the capacity of DHHS to implement system reform.
c. Assist the Division to work with LMEs to:
1. Develop and implement 5- 10 critical performance indicators to be
used to hold LMEs accountable for managing the MH/ DD/ SA system.
2. Standardize the utilization management functions for non- Medicaid
services.
3. Develop LME expertise to undertake utilization management for
Medicaid services beginning July 1, 2007, but no later than July 1, 2009.
4. Develop standardized LME operating procedures.
47
5. Implement other LME management functions.
d. Provide technical assistance and oversight to providers and LMEs to ensure
that best practices and new services are being delivered with fidelity to the model.
5. Appropriate $ 300,000 to the DHHS to create three full- time positions for the creation of a
Local Management Strategic Assistance Team to assist LMEs develop, implement and
maintain their statutory responsibilities.
EFFECTIVE DATE: The bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
48
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 25 [ v. 7] ( 04/ 27)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 11/ 2006 10: 39: 15 AM
Short Title: Strengthen State MH/ DD/ SA Reform. ( Public)
Sponsors: .
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO STRENGTHEN STATE LEADERSHIP FOR SYSTEM REFORM OF
3 MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE
4 ABUSE SERVICES AND TO APPROPRIATE FUNDS AS RECOMMENDED BY
5 THE JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL
6 HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE
7 SERVICES.
8 The General Assembly of North Carolina enacts:
9 SECTION 1.( a). G. S. 122C- 102 reads as rewritten:
10 " § 122C- 102. State Plan for Mental Health, Developmental Disabilities, and
11 Substance Abuse Services. Services; system performance measures.
12 ( a) Purpose of State Plan. – The Department shall develop and implement a State
13 Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services. The
14 purpose of the State Plan is to provide a strategic template regarding how State and
15 local resources shall be organized and used to provide services. The State Plan shall be
16 issued every three- years beginning July 1, 2007. It shall identify specific goals to be
17 achieved by the Department, area authorities and county programs over a three year
18 period of time and benchmarks for determining whether progress is being made towards
19 those goals. It shall also identify data that will be used to measure progress towards the
20 specified goals. In order to increase the ability of the State, area authorities, county
21 programs, private providers and consumers to successfully implement the goals of the
22 State Plan, the Department shall not adopt or implement policies that are inconsistent
23 with the State Plan without first consulting with the Joint Legislative Committee on
24 Mental Health, Developmental Disabilities, and Substance Abuse Services.
25 ( b) Content of State Plan. – The State Plan shall include the following:
26 ( 1) Vision and mission of the State Mental Health, Developmental
27 Disabilities, and Substance Abuse Services system.
49
1 ( 2) Organizational structure of the Department and the divisions of the
2 Department responsible for managing and monitoring mental health,
3 developmental disabilities, and substance abuse services.
4 ( 3) Protection of client rights and consumer involvement in planning and
5 management of system services.
6 ( 4) Provision of services to targeted populations, including criteria for
7 identifying targeted populations.
8 ( 5) Compliance with federal mandates in establishing service priorities in
9 mental health, developmental disabilities, and substance abuse.
10 ( 6) Description of the core services that are available to all individuals in
11 order to improve consumer access to mental health, developmental
12 disabilities, and substance abuse services at the local level.
13 ( 7) Service standards for the mental health, developmental disabilities, and
14 substance abuse services system.
15 ( 8) Implementation of the uniform portal process.
16 ( 9) Strategies and schedules for implementing the service plan, including
17 consultation on Medicaid policy with area and county programs,
18 qualified providers, and others as designated by the Secretary,
19 intersystem collaboration, promotion of best practices, technical
20 assistance, outcome- based monitoring, and evaluation.
21 ( 10) A plan for coordination of the State Plan for Mental Health,
22 Developmental Disabilities, and Substance Abuse Services with the
23 Medicaid State Plan, and NC Health Choice.
24 ( 11) A business plan to demonstrate efficient and effective resource
25 management of the mental health, developmental disabilities, and
26 substance abuse services system, including strategies for
27 accountability for non- Medicaid and Medicaid services.
28 ( 12) Strategies and schedules for implementing a phased in plan to
29 eliminate disparities in the allocation of State funding across county
30 programs and area authorities by January 1, 2007, including methods
31 to identify service gaps and to ensure equitable use of State funds to
32 fill those gaps among all counties.
33 ( c) State performance measures. – The State Plan shall also include a mechanism
34 for measuring the State's progress towards increased performance on the following
35 matters: access to services, consumer- focused outcomes, individualized planning and
36 supports, promotion of best practices, quality management systems, system efficiency
37 and effectiveness, and prevention and early intervention. Beginning October 1, 2006,
38 and every six months thereafter, the Secretary shall report to the General Assembly and
39 the Joint Legislative Oversight Committee on Mental Health, Developmental
40 Disabilities and Substance Abuse Services on the State's progress in these performance
41 areas."
42 SECTION 1.( b). The North Carolina Department of Health and Human
43 Services ( DHHS) shall review all State Plans for Mental Health, Developmental
44 Disabilities, and Substance Abuse Services implemented after July 1, 2001 and before
50
1 the effective date of this act and produce a single document that contains a cumulative
2 statement of all still applicable provisions of those Plans. This cumulative document
3 shall constitute the State Plan until July 1, 2007.
4 DHHS and the Secretary shall also identify those provisions in
5 G. S. 122C- 112.1, prior State Plans, and directives or communications by the Division of
6 Mental Health, Developmental Disabilities, and Substance Abuse Services that must be
7 adopted as administrative rules in order to be enforceable and undertake to adopt those
8 rules.
9 SECTION 2. G. S. 122C- 112.1( a)( 9) reads as rewritten:
10 " § 122C- 112.1. Powers and duties of the Secretary.
11 ( a) The Secretary shall do all of the following:
12 . . .
13 ( 9) Assist Provide ongoing and focused technical assistance to area
14 authorities and county programs in the implementation of their
15 administrative and management functions and the establishment and
16 operation of community- based programs. The Secretary shall include
17 in the State Plan a mechanism for monitoring the Department's success
18 in implementing this duty and the progress of area authorities and
19 county programs in achieving these functions."
20 SECTION 3. There is appropriated from the General Fund to the
21 Department of Health and Human Services ( DHHS) the sum of one million seven
22 hundred thousand dollars ($ 1,7000,000) for the 2006- 2007 fiscal year to be used to hire
23 one or more independent consultants to undertake the following tasks:
24 a. Assist DHHS with the strategic planning necessary to develop the
25 revised State Plan as required under G. S. 122C- 102. The State Plan
26 shall be coordinated with local and regional crisis service plans by area
27 authorities and county programs.
28 b. Study and make recommendations to increase the capacity of DHHS to
29 implement system reform successfully and in a manner that maintains
30 strong management functions by area authorities and county programs
31 at the local level.
32 c. Assist the Division of Mental Health, Developmental Disabilities , and
33 Substance Abuse Services to work with area authorities and county
34 programs to:
35 1. Develop and implement five to ten critical performance
36 indicators to be used to hold area authorities and county
37 programs accountable for managing the mental health,
38 developmental disabilities, and substance abuse services
39 system. The performance system indicators shall be
40 implemented no later than six months after the consultant's
41 contract is awarded and in no event later than July 1, 2007.
42 2. Standardize the utilization management functions for Medicaid
43 and non- Medicaid services and for the review and approval of
44 person- centered plans.
51
1 3. Develop area authorities' and county programs' expertise to
2 assume utilization management for Medicaid services. The
3 goal shall be to have a portion of the area authorities and county
4 programs assume that function beginning July 1, 2007 and the
5 remainder to assume the function no later than July 1, 2009.
6 4. Develop a standardized operating procedure for area authorities
7 and county programs.
8 5. Implement other uniform procedures for the management
9 functions of area authorities and county programs.
10 d. Provide technical assistance and oversight to private service providers,
11 area authorities, and county programs to ensure that best practices and
12 new services are being delivered with fidelity to the service definition
13 model.
14 SECTION 4. There is appropriated from the General Fund to the
15 Department of Health and Human Services, Division of Mental Health, Developmental
16 Disabilities, and Substance Abuse Services, the sum of three hundred thousand dollars
17 ($ 300,000) for the 2006- 2007 fiscal year to be used for three full time positions to create
18 a Local Management Entity Strategic Assistance Team ( Team). The Team shall assist
19 local management entities develop, implement, and maintain their statutory
20 responsibilities.
21 SECTION 5. This act becomes effective July 1, 2006.
22
52
LEGISLATIVE PROPOSAL # 5
STRENGTHEN LOCAL MANAGEMENT ENTITIES
( LMES)
53
LEGISLATIVE PROPOSAL # 5:
A RECOMMENDATION OF THE LEGISLATIVE OVERSIGHT COMMITTEE FOR
MH/ DD/ SAS
TO THE 2005 GENERAL ASSEMBLY, 2006 SESSION
AN ACT TO CLARIFY AND STRENGTHEN THE ROLE OF LOCAL
MANAGEMENT ENTITIES.
SHORT TITLE: Strengthen Local Management Entities ( LMEs).
BRIEF OVERVIEW This bill would:
1. Amend Article 4 of Chapter 122C to clearly articulate the administrative and
managerial functions that are the responsibility of an LME and clarify that LME functions
may not be removed by the Secretary absent an individualized finding that a particular
program is not providing minimally adequate services or is in imminent danger of failing
financially.
2. Direct the Division to recalculate the LME systems management allocations for SFY
2006- 2007 to include funds for each LME to implement 24/ 7/ 365 screening, triage and
referral and the review and approval of all person- centered plans.
3 Direct the Department to retain all funds withdrawn from the LME cost model
allocations that are not accounted for in subsection 5.2 of this section and transfer the funds
to LMEs to use for services.
4. Amend Article 4 of Chapter 122C to comply with the current Division practice to
require that by July 1, 2007, all LMEs must have catchment areas that include at least 6
counties or a population of at least 200,000. LMEs that do not comply with this
requirement will lose 10% of their administrative funding each year until mergers have
been accomplished. Administrative savings realized under this provision shall be
reallocated to those LMEs for services.
5. Direct the Office of State Personnel to study the job functions of area directors and
finance officers and implement job classifications by December 1, 2006, that reflect the
necessary skills for those positions. These new requirements would apply to persons hired
on or after January 1, 2007.
54
6. Standardize area board membership to 3- year terms and prohibit individuals from
serving more than 2 consecutive terms. Amend LME board member requirements to
increase participation by individuals with business and financial backgrounds and to create
more flexibility as to the appointment of consumer members.
7. Amend Chapters 122C and 160A to require that the quarterly financial reports filed
by LMEs with their counties must be reviewed and commented on by the county finance
officers.
8. Amend a number of statutes to clarify that counties may create provide services to
an LME under their general powers.
EFFECTIVE DATE: The merger requirements for LMEs would become effective
July 1, 2007. The job classifications for LME director and finance officer would
become effective January 1, 2007 and apply to persons hired on or after that date.
The remainder of the bill would become effective July 1, 2006.
A copy of the proposed legislation begins on the next page
55
1
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
U D
BILL DRAFT 2005- RCz- 18 [ v. 12] ( 03/ 09)
( THIS IS A DRAFT AND IS NOT READY FOR INTRODUCTION)
5/ 12/ 2006 9: 19: 49 AM
Short Title: Strengthen Local Management Entities ( LMEs). ( Public)
Sponsors: .
Referred to:
2 A BILL TO BE ENTITLED
3 AN ACT TO CLARIFY AND STRENGTHEN THE ROLE OF LOCAL
4 MANAGEMENT ENTITIES AS RECOMMENDED BY THE JOINT
5 LEGISLATIVE OVERSIGHT COMMITTEE ON MENTAL HEALTH,
6 DEVELOPMENTAL DISABILITIES AND SUBSTANCE ABUSE SERVICES.
7 The General Assembly of North Carolina enacts:
8 SECTION 1. G. S. 122C- 3 is amended by adding a new subdivision to read:
9 " § 122C- 3. Definitions.
10 As used in this Chapter, unless another meaning is specified or the context clearly
11 requires otherwise, the following terms have the meanings specified: The following
12 definitions apply in this Chapter:
13 . . .
14 ( 20b) " Local management entity" or " LME" means an area authority, county
15 program or consolidated human services agency. An LME is not a
16 unit of local government and the term refers to functional
17 responsibilities rather than governance structure."
18 SECTION 2. G. S. 122C- 111 reads as rewritten:
19 " § 122C- 111. Administration.
20 The Secretary shall administer and enforce the provisions of this Chapter and the
21 rules of the Commission and shall operate State facilities. An area director or program
22 director shall ( i) manage the public mental health, developmental disabilities and
23 substance abuse system for administer the programs of the area authority or county
24 program, as applicable, program according to the local business plan, and ( ii) enforce
25 applicable State laws, rules of the Commission, and rules of the Secretary. The
26 Secretary in cooperation with area and county program directors and State facility
27 directors shall provide for the coordination of public services between area authorities,
56
1 county programs, and State facilities. The area authority or county program shall
2 monitor the provision of mental health, developmental disability, and substance abuse
3 services for compliance with the law, which monitoring shall not supercede or duplicate
4 the regulatory authority or functions of agencies of the Department."
5 SECTION 3. G. S. 122C- 115.2( a) reads as rewritten:
6 " § 122C- 115.2. Business LME business plan required; content, process, certification.
7 ( a) Every county, through an area authority or county program, shall provide for
8 the development, review, and approval of a an LME business plan for the management
9 and delivery of mental health, developmental disabilities, and substance abuse services.
10 A An LME business plan shall provide detailed information on how the area authority
11 or county program will meet State standards, laws, and rules for ensuring quality mental
12 health, developmental disabilities, and substance abuse services, including outcome
13 measures for evaluating program effectiveness. The business plan shall be in effect for
14 at least three State fiscal years."
15 SECTION 4. Article 4 of Chapter 122C is amended by adding a new section
16 to read:
17 " § 122C- 115.4. Responsibilities of local management entities.
18 ( a) Local management entities are responsible for the administration and
19 management of the public system of mental health, developmental disabilities, and
20 substance abuse services at the community level. An LME plans, develops, implements
21 and monitors services within a specified geographic area for both insured and uninsured
22 individuals.
23 ( b) The core functions of an LME include all of the following:
24 ( 1) Access for all citizens to core services through the implementation of a
25 24- hour a day, seven- day a week screening, triage, and referral process and a uniform portal of
26 entry into care.
27 ( 2) Provider endorsement, monitoring, technical assistance, and capacity
28 development. An LME may remove as a choice a provider who fails to meet defined quality
29 criteria or fails to provide data required for monitoring client outcomes.
30 ( 3) Utilization review and determination of the appropriate level and
31 intensity of services for all State- funded services, authorization of
32 recipients of services under a Medicaid waiver, review and approval of
33 all person- centered plans, utilization management for all services, care
34 coordination, quality management, and authorization of State
35 psychiatric hospital and other State facility bed days.
36 ( 4) Community collaboration and consumer affairs including assurance of
37 rights, appeals, establishment and support for an effective consumer
38 and family advisory committee.
39 ( 5) Financial management and accountability including information
40 management for the delivery of publicly funded services for mental
41 illness, developmental disabilities, and substance abuse.
42 ( c) An area authority, county program may contract with any public or private
43 entity for the implementation of some or all of the LME responsibilities articulated
44 under this section. A consolidated human services agency may contract with any public
57
1 or private entity for the implementation of some or all of the LME responsibilities
2 subject to the requirements of G. S. 122C- 127. The Secretary may not remove any
3 responsibility enumerated under subsection ( b) of this section absent an individualized
4 finding that a particular area authority or county program is not providing minimally
5 adequate services under G. S. 122C- 124.1 or is in imminent danger of failing financially
6 under G. S. 122C- 125. The notice and procedural requirements of G. S. 122C- 124.1 and
7 122C- 125 shall apply to the findings."
8 SECTION 5. Effective July 1, 2009. G. S. 122C- 115.4( b) as enacted in
9 Section 4 of this act reads as rewritten:
10 "( b) The core functions of an LME include all of the following:
11 ( 1) Access for all citizens to core services through the implementation of a
12 24- hour a day, seven- days a week screening, triage, and referral
13 process and a uniform portal of entry into care.
14 ( 2) Provider endorsement, monitoring, technical assistance, and capacity
15 development. An LME may remove as a choice a provider who fails
16 to meet defined quality criteria or fails to provide data required for
17 monitoring client outcomes.
18 ( 3) Utilization review and determination of the appropriate level and
19 intensity of services for all state funded services, authorization of
20 recipients of services under a Medicaid waiver, review and approval of
21 all person- centered plans, utilization management for all services, care
22 coordination, quality management, and authorization of State
23 psychiatric hospital and other State facility bed days.
24 ( 4) Community collaboration and consumer affairs including assurance of
25 rights, appeals, establishment and support for an effective consumer
26 and family advisory committee.
27 ( 5) Financial management and accountability including information
28 management for the delivery of publicly funded services for mental
29 illness, developmental disabilities, and substance abuse."
30 SECTION 6. G. S. 122C- 118.1 reads as rewritten:
31 " § 122C- 118.1. Structure of area board.
32 ( a) An area board shall have no fewer than 11 and no more than 25 members. In
33 a single- county area authority, the members shall be appointed by the board of county
34 commissioners. Except as otherwise provided, in areas consisting of more than one
35 county, each board of county commissioners within the area shall appoint one
36 commissioner as a member of the area board. These members shall appoint the other
37 members. The boards of county commissioners within the multicounty area shall have
38 the option to appoint the members of the area board in a manner other than as required
39 under this section by adopting a resolution to that effect. The boards of county
40 commissioners in a multicounty area authority shall indicate in the business plan each
41 board's method of appointment of the area board members in accordance with G. S.
42 122C- 115.2( b). These appointments shall take into account sufficient citizen
43 participation, equitable representation of the disability groups, and equitable
44 representation of participating counties. Individuals appointed to the board shall include
58
1 an individual with financial expertise or expertise, a county finance officer, an
2 individual with expertise in management or business, and an individual representing the
3 interests of children. A member of the board may be removed with or without cause by
4 the initial appointing authority. Vacancies on the board shall be filled by the initial
5 appointing authority before the end of the term of the vacated seat or within 90 days of
6 the vacancy, whichever occurs first, and the appointments shall be for the remainder of
7 the unexpired term.
8 ( b) At least Not more than fifty percent ( 50%) of the members of the area board
9 shall represent the following:
10 ( 1) A physician licensed under Chapter 90 of the General Statutes to
11 practice medicine in North Carolina who, when possible, is certified as
12 having completed a residency in psychiatry.
13 ( 2) A clinical professional from the fields of mental health, developmental
14 disabilities, or substance abuse.
15 ( 3) A At least one family member or an individual from a citizens'
16 organizations organization composed primarily of consumers or their
17 family members, representing the interests of individuals:
18 a. With mental illness; and
19 b. In recovery from addiction; and or
20 c. With developmental disabilities.
21 ( 4) Openly At least one openly declared consumers: consumer:
22 a. With mental illness; and
23 b. With developmental disabilities; and disabilities; or
24 c. In recovery from addiction.
25 ( c) The board of county commissioners may elect to appoint a member of the
26 area authority board to fill concurrently more than one category of membership if the
27 member has the qualifications or attributes of more than one category of membership.
28 ( d) Any member of an area board who is a county commissioner serves on the
29 board in an ex officio capacity. The terms of county commissioners on an area board are
30 concurrent with their terms as county commissioners. The terms of the other members
31 on the area board shall be for four three years, except that upon the initial formation of
32 an area board one- fourth one- third shall be appointed for one year, one- fourth one- third
33 for two years, one- fourth for three years, and all remaining members for four three
34 years. Members other than county commissioners shall not be appointed for more than
35 two consecutive terms. Board members serving as of July 1, 2006 may remain on the
36 board for one additional term.
37 ( e) Upon request, the board shall provide information pertaining to the
38 membership of the board that is a public record under Chapter 132 of the General
39 Statutes."
40 SECTION 7. G. S. 122C- 115.1( g) reads as rewritten:
41 "( g) In a single- county program, an advisory committee shall be appointed by the
42 board of county commissioners and shall report to the county manager. The
43 appointments shall take into account sufficient citizen participation, equitable
44 representation of the disability groups, and equitable representation of participating
59
1 counties. At least fifty percent ( 50%) of the The membership shall conform to the
2 requirements in G. S. 122C- 118.1( b)( 1)-( 4). G. S. 122C- 118.1. In a multicounty
3 program, the advisory committee shall be appointed in accordance with the terms of the
4 interlocal agreement."
5 SECTION 8. G. S. 122C- 115.1( a) reads as rewritten:
6 " § 122C- 115.1. County governance and operation of mental health, developmental
7 disabilities, and substance abuse services program.
8 ( a) A county may operate a county program for mental health, developmental
9 disabilities, and substance abuse services as a single county or, pursuant to Article 20 of
10 Chapter 160A of the General Statutes, may enter into an interlocal agreement with one
11 or more other counties for the operation of a multicounty program. An interlocal
12 agreement shall provide for the following:
13 ( 1) Adoption and administration of the program budget in accordance with
14 Chapter 159 of the General Statutes.
15 ( 2) Appointment of a program director to carry out the provisions of G. S.
16 122C- 111 and duties and responsibilities delegated by the county.
17 Except when specifically waived by the Secretary, the program
18 director shall meet the following minimum qualifications:
19 a. Masters degree,
20 b. Related experience, and
21 c. Management experience.
22 ( 3) A targeted minimum population of 200,000 or a targeted minimum
23 number of five counties served by the program.
24 ( 4) Compliance with the provisions of this Chapter and the rules of the
25 Commission and the Secretary.
26 ( 5) Written notification to the Secretary prior to the termination of the
27 interlocal agreement.
28 ( 6) Appointment of an advisory committee. The interlocal agreement shall
29 designate a county manager to whom the advisory committee shall
30 report. The interlocal agreement shall also designate the appointing
31 authorities. The appointing authorities shall make appointments that
32 take into account sufficient citizen participation, equitable
33 representation of the disability groups, and equitable representation of
34 participating counties. At least fifty percent ( 50%) of the membership
35 shall conform to the requirements provided in G. S.
36 122C- 118.1( b)( 1)-( 4). G. S. 122C- 188.1."
37 SECTION 9. Effective January 1, 2007, G. S. 122C- 115.1( a), as amended by
38 Section 8 of this act reads as rewritten:
39 " § 122C- 115.1. County governance and operation of mental health, developmental
40 disabilities, and substance abuse services program.
41 ( a) A county may operate a county program for mental health, developmental
42 disabilities, and substance abuse services as a single county or, pursuant to Article 20 of
43 Chapter 160A of the General Statutes, may enter into an interlocal agreement with one
60
1 or more other counties for the operation of a multicounty program. An interlocal
2 agreement shall provide for the following:
3 ( 1) Adoption and administration of the program budget in accordance with
4 Chapter 159 of the General Statutes.
5 ( 2) Appointment of a program director to carry out the provisions of
6 G. S. 122C- 111 and duties and responsibilities delegated by the county.
7 Except when specifically waived by the Secretary, the program
8 director shall meet all the following minimum qualifications:
9 a. Masters degree, degree.
10 b. Related experience, and related experience.
11 c. Management experience.
12 d. Any other qualifications required under the job classification
13 adopted by the State Personnel Commission.
14 ( 3) A targeted minimum population of 200,000 or a targeted minimum
15 number of five counties served by the program.
16 ( 4) Compliance with the provisions of this Chapter and the rules of the
17 Commission and the Secretary.
18 ( 5) Written notification to the Secretary prior to the termination of the
19 interlocal agreement.
20 ( 6) Appointment of an advisory committee. The interlocal agreement shall
21 designate a county manager to whom the advisory committee shall
22 report. The interlocal